UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K/A

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended November 30, 2000

Commission file number 0-20562

COREL CORPORATION
(Exact name of Registrant as Specified in its Charter)

 

Canada	Not Applicable
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification Number)

1600 Carling Avenue
Ottawa, Ontario, Canada    KIZ 8R7
(Address of Principal Executive Offices including Zip Code)

(613) 728-8200
(Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

Title of Each Class

Common shares, no par value

Common share purchase rights

      Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes    [X]     No [   ]

      Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.4054 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]

     As of February 21, 2001, the aggregate market value of Common Shares held by non-affiliates of the registrant, based on the closing sales price of $2.19 of the Registrant's Common Shares as reported on the NASDAQ National Market, was $161,112,814. As of that date 73,651,572 Common Shares were issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

     None

COREL CORPORATION

FORM 10-K

For The Fiscal Year Ended November 30, 2000

Index

Part I.		Page
Item 1.	Business	3
Item 2.	Properties	9
Item 3.	Legal Proceedings and Government Proceedings	9
Item 4.	Submission of Matters to a Vote of Security Holders	10
Part II.
Item 5.	Market for the Registrant's Common Equity and Related Stockholder Matters	10
Item 6.	Selected Financial Data	11
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	12
Item 7a.	Quantitative and Qualitative Disclosures About Market Risks	12
Item 8.	Consolidated Financial Statements and Supplementary Data	12
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosures	12
Part III.
Item 10.	Directors and Executive Officers of the Registrant	12
Item 11.	Executive Compensation	14
Item 12.	Security Ownership of Certain Beneficial Owners and Management	17
Item 13.	Certain Relationships and Related Transactions	17
Part IV.
Item 14.	Exhibits, Consolidated Financial Statement Schedules and Reports on Form 8-K	17
Signatures		19

All financial information contained in this report is expressed in United States dollars, unless otherwise stated.

PART I

Item 1. Business

GENERAL

For the purposes of this report, except in the consolidated financial statements and management's discussion and analysis thereon, unless the context otherwise requires, "Corel" and "the Company" refer to the consolidated operations of Corel Corporation and its wholly owned subsidiaries, Corel Corporation Limited, Corel International Corp., Corel, Inc. and Corel Corporation (U.S.A.). The Company was incorporated as Corel Systems Corporation under the Canada Business Corporations Act by Articles of Incorporation dated May 29, 1985. The name of the Company was changed to Corel Corporation in May 1992. The Company was continued under the Canada Business Corporation Act by Articles of Amalgamation dated December 1, 1998.

Corel develops, manufactures, licenses, sells and supports a wide range of software products including graphics, business productivity and consumer. Corel products are available for users of most PCs, including International Business Machines ("IBM") Corporation and IBM-compatible PCs, Apple Computer Inc.'s Macintosh^® ("Mac") and Linux-based systems. In 2001, the Company plans continue to expand its support of the Web, delivering the Internet's versatility to customers through web-based applications, content and services. Corel also plans to develop applications for Microsoft Corporation's ("Microsoft") .NET platform as part of services to be available on multiple platforms.

On October 2, 2000, Corel announced a strategic alliance with Microsoft. The Company issued 24,000,000 Series A, participating convertible, non-voting, non-redeemable preferred shares to Microsoft for total gross proceeds of $135.0 million ($5.625 per share). Each preferred share is convertible into one common share but not in the hands of Microsoft or its affiliates. As part of the share purchase agreement the Company is obligated to file, with the United States Securities and Exchange Commission ("SEC") a resale registration statement for 24,000,000 common shares underlying these preferred shares. Under the terms of a technology and services agreement the companies will work together to support the development, testing and marketing of new products related to the .NET platform and, upon request from Microsoft at any time prior to October 2, 2003, Corel is obligated to provide 30 full time equivalents (20 developers and 10 testers) for a 12 month period to port the .NET platform from the Windows platform to the Linux platform. The Company has deducted from equity $3.0 million of the total money received from Microsoft for this future possible obligation.

Corel's business strategy emphasizes the development of a broad line of software application products for business, academic and personal use, marketed through multiple channels of distribution. Corel is divided into two main product groups: Creative Products and Business Applications Products and various supporting departments.

The Creative Products group develops graphics software applications designed for business, academic and home markets.

The Business Applications Products group creates business productivity applications designed for the business, academic and home markets.

The Sales department is responsible for building long-term business relationships with customers. This department is organized to serve three main customer types: end-users, original equipment manufacturers ("OEMs") and enterprises. The department also focuses directly on large organizations, offering tailored license programs and organization-wide support. The department manages the channels that serve customers by working with distributors, resellers and OEMs. The Customer Service and Technical Support departments support Corel's products with technical support and customer service for end-users and organizations.

Other supporting departments are responsible for managing business operations and overall business planning. This includes the process of manufacturing and delivering finished goods and licenses, as well as corporate functions such as finance, administration, human resources, legal, business development and information technology.

The Company has only one global operating segment and sells its products worldwide from three geographic regions. Note 15 to the Consolidated Financial Statements (see Item 8) is incorporated herein by reference.

PRODUCTS

CREATIVE PRODUCTS

The Creative Products group develops graphics applications software, which provides instructions for creating and manipulating graphics, text, or numbers. Corel's graphics applications are designed to meet the needs of general business users and graphics professionals. Primary examples of graphics applications include illustration, photo editing and painting, 3D rendering, and animation programs. Corel's graphics applications programs are developed principally for Microsoft® Windows® ("Windows"), Macintosh and Linux operating systems and are available in English and French.

CorelDRAW®. CorelDRAW is a suite of software programs featuring integration of all of the major graphics functions that share a common "look and feel". CorelDRAW modules feature common commands and extensive use of object linking and embedding ("OLE") cross-application capabilities. CorelDRAW is available in several versions, with certain combinations of modules, supporting utilities, clipart images, fonts and photos available for the various operating system platforms.

The CorelDRAW module is an illustration program allowing users to produce color illustrations incorporating both text and objects. The Corel PHOTO-PAINT® module is a photo-editing and painting module that enables users to apply global photo-retouching and pixel by pixel editing to scanned or photographic images. Supporting utilities include: Microsoft® Visual Basic® for Applications 6.2, a supporting application which allows developers to build custom business solutions by automating and integrating off-the-shelf software applications to meet specific customer needs; Canto® Cumulus® Desktop LE 5.0, a tool that organizes media and graphics files into a catalog which can be indexed so that users can find images, designs, clipart, stock photos and QuickTime® movies quickly and easily; Bitstream® Font Navigator^TM 4.0, a tool that allows users a quick and easy way to find, install and organize fonts into manageable groups and view and print font samples; Corel TEXTURE^TM, a tool for creating realistic natural textures; CorelTRACE ^TM, a bitmap-to-vector conversion utility for images and text; Corel CAPTURE^TM, a tool for capturing portions of the, or the entire, application window; Corel R.A.V.E.^TM, is a new product that gives users the ability to create effects that take place over a period of time, resulting in an animation. CorelDRAW also includes Adobe® Acrobat® Reader and Adobe® Photoshop® compatible plugin filters, including Digimarc® Digital Watermarking and Human Software Squizz!^TM.

CorelDRAW has a leading market share in the illustration segment of the Windows graphics software market with an installed base of over 12.4 million units worldwide.

Corel PHOTO-PAINT®.Corel PHOTO-PAINT is a comprehensive photo-editing, image composition and painting application. Corel PHOTO-PAINT 10 features a variety of image-enhancing filters to improve the quality of scanned images and special effects filters that dramatically alter the appearance of images, such as the new Red Eye Removal and Smart Blur filters. Corel PHOTO-PAINT is available in various versions for various operating systems.

Corel VENTURA ^TM. Corel VENTURA is a suite of high-end desktop publishing software programs for publishing documents of any size, length or complexity. The latest version of Corel VENTURA allows users to publish Corel VENTURA documents to HTML, portable electronic formats, such as Envoy^TM and Adobe Acrobat, a CD-ROM, over an internal network, or on the Internet.

KPT®. KPT is a collection of image filters that produce spectacular effects for print and the Web. KPT includes plug-ins that extend and enhance the creative possibilities of Adobe Photoshop and compatible products.

Bryce®. Bryce is an easy way to create, explore and animate extraordinary imagery for multimedia, video and the Web.

Corel® Painter ^TM. Corel Painter, the ultimate Natural-Media® painting tool, delivers hundreds of brushes and creative materials, opening new horizons in high-quality output for print and the Web.

Corel® KnockOut. Corel KnockOut is a masking tool that can perform complex masking functions, while preserving fine image details, such as blurred or out of focus edges, hair, smoke and shadows.

BUSINESS APPLICATIONS

Corel's Business Applications products are designed for use by a broad class of end-users, regardless of business, industry, or market segment. Primary examples of productivity software applications are word processing, spreadsheet, and presentation graphics programs. Corel's productivity software applications are developed for the Windows, Macintosh, DOS and Linux operating systems and are available in English and French.

Corel® WordPerfect® Suite. Corel WordPerfect suite is a suite of software programs featuring seamless integration of the most commonly used desktop applications. Corel WordPerfect suite combines document creation with graphics and Internet capabilities. There are several versions of Corel WordPerfect suite available.

WordPerfect Office 2000 contains WordPerfect, Quattro Pro , Corel Presentations and Trellix2 desktop web publishing. Corel also offers a version of Corel WordPerfect suite for legal professionals, WordPerfect® Law Office 2000 - Legal Edition. WordPerfect Law Office 2000 - Legal Edition offers all the features found in the WordPerfect Office 2000 along with industry-specific applications and resources. WordPerfect Office 2000 Voice-Powered Edition includes all of the above features in addition to the speech recognition technology of Dragon NaturallySpeaking^TM.

Corel® WordPerfect® Suite Professional. Corel WordPerfect Suite Professional is a suite of software programs that includes enhanced Internet connectivity, graphics and database features. WordPerfect Office 2000 Professional includes WordPerfect, Quattro Pro, Corel Presentations, Paradox® 9, CorelCENTRAL^TM 9 and Trellix® 2, a tool which simplifies the process of creating and managing a Web site.

WordPerfect®. WordPerfect is Corel's principal word processing program, providing all the features that users of word processing products expect plus the ability to handle graphics, tables, spreadsheet data, charts, and images imported from other software programs.

Quattro® Pro. Quattro Pro is an integrated spreadsheet with database, business graphics and Internet capabilities.

Paradox®. Paradox, a powerful data management tool, delivers advanced features such as the ability to publish a database to the Web.

Corel® Presentations^TM. Corel Presentations is a presentation graphics program for producing slides, overheads, transparencies and prints.

LINUX OPERATING SYSTEM

Corel® LINUX® OS is built specifically for the desktop and is offered in two versions: Corel LINUX - Standard Edition and Corel LINUX - Deluxe Edition. Based on the Debian version of Linux, this system delivers an easy-to-use, four-step graphical installer that automatically detects most PCI hardware. Features include a KDE-based, drag-and-drop desktop environment and a browser-style file manager.

RESEARCH AND DEVELOPMENT

The PC software industry is characterized by frequent changes in technology and user preferences, which require constant attention to software technology trends, shifting consumer demand and rapid product innovation. The pace of change has recently increased due to the burgeoning interest in the Internet, networking in general, emerging interest in Linux as an operating system and new programming languages and platforms such as Java and Microsoft's .NET platform.

Accordingly, Corel must be able to provide new software products and modify and enhance existing products on a timely and continuing basis to be competitive. Corel employs a strategy of internally developing software, contracting for the development of certain products by third parties; and acquiring or licensing technology that will, in most cases, be enhanced by Corel. Corel believes that its ability to maintain technological competitiveness will depend in large part upon its ability to successfully enhance its existing products, develop new products on a timely basis and acquire or license complementary technologies and products in a timely manner. The Company strives to become as informed as possible at an early stage about changing usage patterns and hardware advances that may affect software design.

Corel's research and development expenses were $71.9 million, $40.0 million and $43.9 million in fiscal 1998, 1999 and 2000, respectively. Those amounts represented approximately 29%, 16% and 28% respectively, of sales in each of those years. Software acquired or licensed for incorporation into Corel's product line totaled $4.7 million in fiscal 1998, $15.4 million in fiscal 1999 and $13.5 million in fiscal 2000. Corel intends to continue significant expenditures for research and development activities.

MANUFACTURING

The principal materials and components used in Corel's products include computer media (diskettes, CD-ROMs or tapes) and documentation. Corel is often able to acquire component parts and materials on a volume discount basis.

Corel contracts all of its manufacturing activity to third parties. Manufacturing involves the duplication of computer media and user manuals, assembly of components, spot testing of the product and final packaging, all in accordance with Corel's specifications. Corel believes there is an adequate supply of and source for the raw materials used in its products, and that multiple sources are available for media duplication, manual printing and final packaging. Corel's products are generally shipped as orders are received and accordingly, Corel has historically operated with little backlog.

MARKETING, SALES AND DISTRIBUTION

Corel's marketing and sales efforts are directed towards several customer types including end-users, corporate accounts, and OEMs. Corel's marketing and sales staff seek to build long-term relationships with customers and end-users of Corel products. In addition to the OEM channel, Corel has four major geographic sales and marketing areas: North America, Latin America, Europe and Asia-Pacific.

End-user marketing activities cover all of Corel's products and target end-users who make individual buying decisions for the PCs they use at work or at home. Marketing activities aimed at end-users include developing and administering reseller relationships, channel marketing and promotions, end-user marketing programs and seminars, events and product training for resellers.

The corporate licensing unit has responsibility for sales and marketing activities that target groups of users in all organizations and enterprises. The unit works directly with these organizations and enterprises, as well as with channel partners such as distributors, value-added resellers and large account resellers, to provide complete desktop productivity solutions to this customer segment. The unit's sales and marketing activities include providing technical training to channel resellers, supporting and providing seminars, events, and sales training for channel partners. The unit also has responsibility for administering the Corel License Programs worldwide. Key products for the corporate licensing unit are graphics and productivity software applications.

The OEM customer unit works with original equipment manufacturers that pre-install or bundle Corel software on their PCs or peripheral hardware.

Finished Goods Channels

Distributors and Resellers. Corel sells its products worldwide to over 160 distributors for resale through software resellers. Distributors include Ingram Micro, Merisel, Tech Data, and Navarre. Resellers include ASAP Software and Software House International. Within the United States and Canada, Corel has sales representatives and support personnel who solicit orders from distributors and resellers and provide product training and sales support. In other countries, Corel's marketing personnel provide product training and sales support.

Licensing. Corel has a program designed to make it easier for large or small organizations to acquire and maintain Corel products. The Corel License Program ("CLP") consists of three separate programs. CLP Universal offers flexible software acquisition, licensing and maintenance options specially designed to meet the needs of large multinational organizations. Targeted audiences include technology specialists and influential end-users in large enterprises. Marketing efforts and fulfillment are generally coordinated through Corel's network of large account resellers. CLP Choice offers flexible software acquisition and licensing options specially designed to meet the needs of small and medium sized organizations. Marketing efforts and fulfillment are generally coordinated through Corel's network of distributors and resellers. CLP Freedom is designed to make it easy and affordable for organizations to standardize on a single software solution. This package allows organizations to license Corel's business or graphics software products for a one- or a two-year term. The minimum licensing commitment to qualify is only 100 employees or workstations within an entire organization or a defined portion of an organization.

Solution Partners. Corel's Solution Partners program is a support relationship with independent developers and consultants that provide products, solutions or services around Corel products. The program supports independent software vendors, consultants, value-added resellers ("VARs"), system integrators, custom application developers, and solution developers; as well as technical support and training organizations. Under this business partnership strategy, the Company provides sales and product information, development services, access to beta software, discounts on Corel products and dedicated developer technical support.

Approved Service Bureaus. The Corel Approved Service Bureau Program ("CASB") supports organizations that output and render files created with Corel's graphics software applications such as CorelDRAW and Corel VENTURA. Under CASB, the Company provides members with product information, free priority technical support and referral services through Corel's bulletin board service and Customer Service and Technical Support networks.

Direct Marketing. Corel promotes some of its products through direct marketing techniques directed toward existing and potential users of Corel's products. Fulfillment of product to the end-user is either by direct shipment or through resellers.

On-line Distribution. Corel offers its products on-line through third party web sites including beyond.com, buy.com and egghead.com as well as through their own sites which include Corel® Store and ClipartCity.com.

OEM Channel

Corel markets certain productivity, graphics, and consumer software applications under license agreements with OEMs that grant the OEMs the right to distribute copies of Corel's products with their hardware products. Corel has OEM agreements covering one or more of its products with most of the major PC and peripheral hardware vendors, including Agfa, Canon, Compaq, Cybermax, Dell, Epson, Gateway 2000, Hewlett-Packard, Packard Bell, PCChips, Quantex and Vobis.

Advertising and Promotion

Advertising, direct marketing, and marketing materials are targeted to various end-user groups through a variety of programs: (i) extensive worldwide advertising in broad consumer media and trade publications; (ii) joint promotions with computer retailers under which qualifying resellers and OEMs are reimbursed for certain advertising expenditures; (iii) trade show and PC user group participation; and (iv) direct corporate marketing efforts. The Company has an in-house creative design group responsible for conceptualizing and producing all of Corel's ad copy, box covers, and promotional material. The Company has an in-house ad agency which places and monitors the effectiveness of Corel's worldwide advertising. The Company maintains a broad advertising campaign emphasizing the Corel brand identity.

CUSTOMERS

As described above, Corel has three main customer types: end-users, organizations or enterprises, and OEMs. Most end-users of Corel products are individuals in business, government agencies, educational institutions and at home. These end-users obtain Corel products primarily through distributors, resellers, and OEMs. Note 15 to the Consolidated Financial Statements (see Item 8) identifies, by name as required, customers that represent more than 10% of Corel's revenues.

PRODUCT SUPPORT

Corel provides product support coverage options to meet the needs of users of Corel products. Support personnel are located in Ottawa, Ontario. Certain support is also provided by qualified third-party support organizations in accordance with Corel's specifications for quality and timeliness of the support response. Corel generally hires individuals with product expertise and provides them with the productivity tools, continuous product education, training and consistent processes to deliver quality support for Corel products. Coverage options currently range from standard no-charge toll telephone support to fee-based offerings providing unlimited toll-free telephone and technical support for all Corel products 24 hours per day, 7 days per week.

Users have access to Corel's Knowledge Base, a database of technical support articles that is updated regularly with useful information regarding Corel products. Corel provides access to Knowledge Base, technical support information and frequently asked question and answers via Corel's worldwide web site on the Internet (http://www.corel.com). Corel maintains a bulletin board service for European customers and a forum on CompuServe to provide users with a mechanism to provide feedback as well as receive technical updates and notes. Additionally, users can access Corel's automated "Fax on Demand" system where up-to-date information about common issues and tips and tricks is stored in numbered documents.

Corel's Customer Service representatives, including a number of third-party organizations, answer questions about product specifications and pricing, sell Corel products, and issue replacement media and documents.

COMPETITION

Competition within distribution channels may adversely affect the Company's business. Corel competes with other software vendors for access to distribution channels, retail shelf space and the attention of customers at the retail level and in corporate accounts. Other competitors with greater market share and significantly greater financial resources may command the attention of the retail accounts, the corporate market and original equipment manufacturers. In order to compete for distribution channel space we must offer compelling reasons to distribute our product at a reasonable price that offers compatibility with competitive products. we must also use innovative marketing ideas in order to compel the distributor to carry our products. Inability to maintain distribution channel space could have a material adverse affect on our business, results of operations and financial condition.

The marketplace is intensely competitive and rapidly changing and we may not be able to compete successfully in the future. The software industry is highly competitive and subject to rapid technology change. Many of our current and potential competitors have larger technical staffs, more established and larger marketing and sales organizations and significantly greater financial resources. The rapid pace of technological change constantly creates new opportunities for existing and new competitors and can quickly render existing technologies less valuable. As the market for our products continues to develop, additional competitors may enter the market and competition may intensify. Inability to compete in the following factors could have a material adverse affect on our business, product performance, product features, ease of use, reliability, hardware and competitor compatibility, brand name recognition, product reputation, pricing levels of advertising, availability and quality of customer support, and timeliness of product upgrades. We compete in the following areas with a variety of companies, including:

Graphics

The Company's graphics software products face substantial competition from a wide variety of companies. In the illustration graphics segment, our competitors include Adobe Systems Incorporated, JASC Software, Inc., Macromedia Inc., Micrografx, Inc. and Microsoft. In the desktop publishing segment, our competitors include Adobe Systems, Inc. Our competitors also include many independent software vendors, such as Autodesk, Inc., and Apple Computer Inc.

Business Productivity

The Company's competitors in the productivity software (primarily office suites) marketplace include Microsoft, IBM (Lotus Development Corporation), Sun Microsystems, Inc., Red Hat, Inc., and Applix Inc. According to industry sources, Microsoft currently has the largest overall market share for office suites. IBM has a large installed base with its spreadsheet program. Also, IBM preinstalls some of its software products on various models of its PCs, competing directly with the Company's productivity software.

PROPRIETARY RIGHTS

Corel regards certain features of its internal operations, software and documentation as proprietary and relies on contract, patent, copyright, trademark, and trade secret laws and other measures to protect its proprietary information. The Company believes, however, that due to the rapid pace of innovation within its industry, factors such as the technological expertise and creative skills of its personnel are more important to establishing and maintaining technological leadership than are the various legal protections of its technology.

Corel provides its products to end users under non-exclusive licenses, which generally have a perpetual term, with the exception of academic licences, and are transferable provided the transferor erases or destroys its copy of the product. In special circumstances, Corel makes source code available for certain of Corel's products. The provision of source code may increase the likelihood of misappropriation or other misuse of Corel's intellectual property. Corel licenses its products pursuant to "shrink wrap" and/or "click wrap" licenses that are not signed by licensees and therefore may be unenforceable under the laws of certain jurisdictions. In addition, the laws of some foreign countries do not protect Corel's proprietary rights to the same extent as do the laws of Canada and the United States.

From time to time Corel receives notices from third parties asserting that Corel has infringed their patents or other intellectual property rights. Corel may find it necessary or desirable in the future to obtain licenses from third parties relating to one or more of its products or relating to current or future technologies. There can be no assurance that third parties will not assert infringement claims against Corel in the future with respect to current or future products or that any such assertion will not require Corel to enter into royalty arrangements or result in costly litigation. As the number of software products in the industry increases and the functionality of these products further overlap, Corel believes that software developers may become increasingly subject to infringement claims. Any such claims, with or without merit, can be time consuming and expensive to defend.

EMPLOYEES

As of February 21, 2001, Corel employed approximately 800 people on a full-time basis. Corel's success depends to a significant extent upon the performance of Corel's executive officers and key technical, sales and marketing personnel. Corel believes that its future success will also depend in large part on its ability to attract and retain highly skilled technical, managerial and sales and marketing personnel. Competition for employees is intense in the software industry. To date, Corel believes it has been successful in its efforts to recruit qualified employees, but there can be no assurance that Corel will continue to be as successful in the future. None of Corel's employees are subject to collective bargaining agreements. Corel believes relations with its employees are favourable.

Item 2. Properties

Corel leases 177,000 square feet of office space in a facility located in Ottawa, Ontario under leases that expire in 2015; 13,025 square feet of office space under a lease that expires in 2002 in another facility in Ottawa, Ontario; 7,292 square feet of office space in a facility located in Dublin, Ireland under leases that expire in 2025 and smaller office spaces in various countries around the world. The Company believes that its facilities will be adequate for its immediate needs and that additional or substitute space is available if needed to accommodate expansion.

Item 3. Legal and Government Proceedings

On December 15, 1999, Corel filed suit against the United States of America in the U.S. District Court for the District of Columbia, in Washington, D.C., for the actions of its agency, the Department of Labor in conducting an unlawful procurement. The Complaint claims that, in its goal to standardize its office automation suite, the Department of Labor violated various statutes, regulations and treaties by "sole-sourcing" its contract to a competing vendor rather than conduct an open and fair procurement in accordance with U.S. law. In dispute is the decision by the Department of Labor to standardize on a competing product despite the fact that, at the time of the award, the WordPerfect family of products was licenced for a majority of the Department's 20,000 work stations. It is believed that the three-year standardization deal with the competing vendor could be valued as high as US $8 million. As a remedy, Corel is seeking an immediate injunction against the further implementation of the "sole source" contract and to have it declared void. Corel is also seeking to have the standardization process and related procurement activities tendered in a fair and open competition in accordance with the applicable statutes, regulations and treaties. The Answer to the Complaint was filed by the Government on March 21, 2000. The Government has filed a motion to have Corel's action dismissed for lack of jurisdiction and, in the alternative, for summary judgment. Corel filed its motion for preliminary injunction. All motions were argued on August 11, 2000 in conjunction with arguments on the merits of the case. The decision of the court is pending.

On October 14, 1999, the Ontario Securities Commission filed charges against Dr. Michael C.J. Cowpland, the Company's former Chairman, President and Chief Executive Officer and his holding company, M.C.J.C. Holdings Inc., in the Ontario Court of Justice. The charges include four counts of violating provisions of the Ontario Securities Act related to insider trading. The trial of these issues is a private matter between the Ontario Securities Commission and Dr. Cowpland as an individual. As such, it is not expected to affect the Company's day-to-day activities. Dr. Cowpland has denied all allegations by the Ontario Securities Commission.

On March 13, 2000, the Company was served with a complaint filed against it and Dr. Michael C.J. Cowpland by plaintiffs Anthony Basilio and Fred Spagnola in the United States District Court for the Eastern District of Pennsylvania. The complaint was filed on behalf of all persons who purchased or otherwise acquired Corel common shares between December 7, 1999 and December 21, 1999 (the "Class Period"). The complaint alleges that the defendants violated various provisions of the federal securities laws, including Section 10(b), Section 20(a) and Rule 10b-5 of the Securities Exchange Act of 1934, as amended, by misrepresenting or failing to disclose material information about Corel's financial condition. The complaint seeks an unspecified amount of money damages. On March 29, 2000, the Company was served with a second complaint filed against the same named defendants by plaintiff Alan Treski in the United States District Court for the Eastern District of Pennsylvania. This second complaint references an identical Class Period as the Basilio complaint referenced above and contains similar allegations. Since service of the Basilio and Treski complaints, the Company became aware of four additional complaints filed in the same jurisdiction and one complaint filed in the District of Massachusetts that reference an identical Class Period and contain similar allegations. At the scheduling conference on June 14, 2000, the court appointed Fred Spagnola, Michael Perron and David Chavez as Lead Plaintiffs, and the law firms of Weinstein, Kitchenoff Scarlato & Goldman Ltd. and Savett Frutkin Podell & Ryan, P.C. as Co-Lead Counsel. The Court has consolidated all pending cases in the Eastern District of Pennsylvania. An Amended Consolidated Complaint was served on or about August 14, 2000. The Amended Consolidated Complaint references an expanded class period, from December 7, 1999 to March 20, 2000 (inclusive). The Company filed a Motion to Dismiss the Consolidated Class Action Complaint on the grounds of forum non conveniens and Pursuant to Rules 9(b) and 12(b)(6). FED.R.CIV.P on October 16, 2000. On December 4, 2000 the plaintiffs filed their answer to Corel's Motion to Dismiss. Corel subsequently filed its Reply on January 16, 2001. The motion has yet to be heard by the court. The Company intends to aggressively defend this matter.

In January, 2001, the Company was served by the U.S. Department of Justice with a Civil Investigative Demand ("CID"), pursuant to the Antitrust Civil Process Act, inquiring into the conduct and activities surrounding the Microsoft purchase of Corel shares by its October 2, 2000 agreement and ancillary agreements. The Company is currently gathering and providing documentation in response to the demand.

On January 5, 2001, in its review of the trading of Corel Corporation stock prior to the announcement on October 2, 2000 of the purchase by Microsoft of Corel shares, the Ontario Securities Commission requested that Corel provide a written chronology of events resulting in the announcement. The Company is also gathering and providing information to the OSC in response to this request.

The Company is a party to a number of additional claims arising in the ordinary course of business relating to employment, intellectual property and other matters. Based on its review of the individual matters, the Company believes that such claims, individually, will not have a material adverse effect on its business, financial position or results of operations but, in the aggregate, may have a material adverse effect on its business, financial position or results of operations. Such possible effect cannot be reasonably estimated at this time.

Item 4. Submission of Matters to a Vote of Security Holders

None.

PART II

Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters

Price Range of Common Shares

The Company's Common Shares are traded on The Toronto Stock Exchange (the"TSE") under the symbol "COR" and in the over-the-counter market on the NASDAQ National Market under the symbol "CORL". The following table sets forth the range of quarterly high and low closing sale prices of the Common Shares in CDN$ on the TSE and in US$ on the NASDAQ National Market within the two most recent fiscal years.

	FISCAL 2000		FISCAL 1999
	High	Low	High	Low
The Toronto Stock Exchange	(Canadian dollars)
First Quarter	$57.95	$19.70	$7.55	$3.76
Second Quarter	21.60	3.00	7.00	3.32
Third Quarter	7.70	4.30	9.65	4.15
Fourth Quarter	9.05	4.01	30.40	7.00
NASDAQ National Market	(US dollars)
First Quarter	$39.25	13.19	$5.13	$2.50
Second Quarter	15.88	3.03	4.63	2.19
Third Quarter	5.25	2.91	6.38	2.81
Fourth Quarter	6.06	2.59	20.88	4.69

As of February 21, 2001, there were 1,118 holders of record of Common Shares. A substantial number of Common Shares of the Company are held by depositories, brokerage firms and financial institutions in "street name." Based upon the number of annual reports and proxy statements requested by such nominees, the management of the Company estimates that the number of beneficial holders of Common Shares approximates 105,000 holders.

Limitations Affecting Security Holders

There is no law or government decree or regulation in Canada that restricts the export or import of capital, or affects the remittances of dividends, insurance or other payments to a non-resident holder of Common Shares.

Dividend Policy

The Company has neither declared nor paid cash dividends on its Common Shares since its inception and does not anticipate paying any dividends in the foreseeable future, but intends to retain future earnings for reinvestment to finance the growth of its business. Any future determination to pay dividends will be at the discretion of the Board of Directors. From time to time, the Company repurchases common shares for cancellation. There is no policy with regards to the timing or amount of common share repurchases and cancellation. There are no plans to repurchase and cancel common shares at this time.

Item 6. Selected Financial Data

The statement of operations data set forth below with respect to the years ended November 30, 1998, 1999 and 2000 and the balance sheet data at November 30, 2000 are derived from the audited financial statements of Corel incorporated by reference in Item 8 hereof and should be read in conjunction with those financial statements and the notes thereto. The balance sheet data at November 30, 1996, 1997, 1998, and 1999 are derived from Note 17 to the audited financial statements of Corel incorporated by reference in item 8 hereof and should be read in conjunction with these financial statements and notes thereto. As discussed in Note 17 to the audited financial statements, the balance sheets for 1996 through 1999 have been restated, but this restatement had no impact on previously reported results of operations or overall cash flows. The statement of operations data set forth below with respect to the fiscal years ended November 30, 1996 and 1997 are derived from audited financial statements not included in this Annual Report on Form 10-K. All amounts are in United States dollars.

	Year ended November 30
	2000	1999	1998	1997	1996
	(in thousands, except per share data)
Canadian GAAP
Sales	$157,487	$243,051	$246,827	$260,581	$334,245
Income (loss) from continuing operations	(55,348)	16,716	(30,448)	(231,678)	(2,750)
Income (loss) from continuing
operations per share (fully diluted)	(0.80)	0.27	(0.51)	(3.84)	(0.05)
Cash and short-term investments	127,430	18,021	24,506	30,629	6,924
Working capital	106,662	23,781	4,692	27,356	129,945
Total assets	218,587	139,716	124,596	144,561	374,088
Novell obligations	10,000	6,594	12,322	18,362	24,940
Shareholders' equity	162,644	64,366	28,583	59,809	290,260

Note: The selected financial data included herein is derived from the Company's financial statements which are prepared on the basis of Canadian GAAP, which differs in some respects from US GAAP. For the periods presented, differences between Canadian GAAP and US GAAP do not result in any material differences in the selected financial data presented herein. Please see Item 8 - Financial Statements and Supplementary Data, and the Notes to the Company's Consolidated Financial Statements, Note 16 - Significant Differences Between Canadian and United States GAAP.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

Overview

For the purposes of this discussion, unless the context otherwise requires, "Corel" refers to the consolidated operations of Corel Corporation and its wholly owned subsidiaries, Corel Corporation Limited, Corel International Corporation, Corel, Inc., and Corel Corporation (U.S.A.), while "the Company" refers to the parent, Corel Corporation. All dollar amounts included herein are expressed in thousands of US$ unless otherwise noted.

Corel develops, manufactures, licenses, sells and supports two main types of software products, creative products and business applications. These products are available on the Windows, MacIntosh and Linux environments.

On March 24, 2000, Corel entered into an agreement to purchase all of the assets relating to the Painter, Bryce and KPT family of graphic software products from MetaCreations Corporation of Santa Barbara California. The cash purchase price for the assets was $10.0 million of which $2.0 million was paid on each of March 24, June 30 and September 30, 2000, with the balance being payable in two further instalments of $2.0 million each on December 31, 2000 and January 31, 2001.

On June 28, 2000, the Company issued 7,299,270 common shares and 3,649,635 common share purchase warrants at CDN $4.11 per unit for total gross proceeds of CDN $30.0 million.The values assigned to each of the components of the unit were based on their relative fair values at the date of the transaction. The warrants are exercisable until June 27, 2001 at a price of CDN $4.56 per common share. In the event that all of the warrants are exercised, the Company will issue an additional 3,649,635 common shares resulting in gross proceeds of CDN $16.6 million. As at November 30, 2000, 11,659 warrants have been exercised for gross proceeds of CDN $53,165.

On July 17, 2000, Corel purchased, and currently maintains a 23% interest in Hemera Technologies, Inc., a privately held company. As consideration for these shares, Corel transferred its GraphicCorp division and related assets to Hemera Technologies, Inc. As of the effective date of the transaction, the fair value of the GraphicCorp division and its related assets was estimated at $9.7 million and the shares were valued at this amount. No gain or loss was recognized on the transfer. In fiscal 2000, Corel's share of Hemera Technologies, Inc.'s operating results was nominal.

On August 15, 2000, Mr. James Baillie, counsel to the law firm of Torys, and Mr. Larry O'Brien, Chair of Calian Technology Ltd., were appointed to the Board of Directors following the Board of Directors' acceptance of the resignation of Mr. William G. Davis for personal reasons. Michael Cowpland resigned as President, Chief Executive Officer and Chair of the Board of Directors of the Company. He continued to serve as a director and as a technology advisor until his resignation as a director on January 25, 2001. Also on August 15, 2000, Derek J. Burney, formerly executive vice-president, engineering and chief technology officer of the Company was appointed interim President and CEO and Mr. Baillie has been appointed as Chair of the Board of Directors. On October 2, 2000, Mr. Burney was appointed President and CEO and appointed to the Board of Directors.

On October 2, 2000, Corel announced a strategic alliance with Microsoft Corporation ("Microsoft"). The Company issued 24,000,000 Series A, participating convertible, non-voting, non-redeemable preferred shares to Microsoft for total gross proceeds of $135.0 million ($5.625 per share). Each preferred share is convertible into one common share but not in the hands of Microsoft or its affiliates. As part of the share purchase agreement the Company is obligated to file, with the United States Securities and Exchange Commission ("SEC") a resale registration statement for 24,000,000 common shares underlying these preferred shares. Under the terms of a technology support and settlement agreement the companies will work together to support the development, testing and marketing of new products related to the .NET platform and, upon request from Microsoft at any time prior to October 2, 2003, Corel is obligated to provide 30 full time equivalents (20 developers and 10 testers) for a 12-month period to port the .NET platform from the Windows platform to the Linux platform. The Company estimated the costs to perform the services described as being $3.0 million based on the estimated average cost per developer and tester required to perform the services when required. If the actual cost to perform the required services is less than the $3.0 million deducted from equity, the remainder will be recorded as an increase to contributed surplus.

Forward Looking Statements

The following information contains forward-looking statements, as defined by the United States Private Securities Litigation Reform Act of 1995, involving Corel's expectations about future financial results and other matters. These statements reflect management's current forecast of certain aspects of Corel's future business. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results of operations to differ materially from historical results or current expectations. The words "plan", "expect", "believe", "intend", "anticipate", "forecast", "target", "estimate" and similar expressions identify forward-looking statements. Risk factors include shifts in customer demand, product shipment schedules, product mix, competitive products and pricing, technological shifts and other variables. Readers are referred to Corel's most recent reports filed with the Securities and Exchange Commission for a more complete discussion of the other risks and uncertainties. The factors underlying forecasts are dynamic and subject to change. As a result, forecasts speak only as of the date they are given and do not necessarily reflect Corel's outlook at any other point in time. Corel does not undertake to update or review these forward-looking statements.

RESULTS OF OPERATIONS

Sales

Sales decreased 35% to $157.5 million in fiscal 2000 from $243.1 million in fiscal 1999. This decrease was due primarily to new versions of Corel's flagship products ,WordPerfect Office 2000 and CorelDRAW 9 Graphics Suite, nearing the end of their life cycles in fiscal 2000. Sales were also negatively impacted in fiscal 2000 by lower product prices, which were implemented in an attempt to gain market share. Corel provides for estimated future returns, exchanges and price protection. The timing of establishment of the provision and actual usage may vary according to the respective products' life cycle and/or the amount of inventory in the distribution channel.

Financial performance in fiscal 2000 as compared to the prior year was negatively impacted primarily by the decline in revenues. Corel has been impacted, as has the entire industry in Corel's belief, by the reduction in the amount of product inventory traditionally held within the retail distribution channel. Corel released CorelDRAW 10 Graphics Suite in early November 2000. Corel generally experiences an increase in revenues upon release of a major upgrade of its flagship products. Corel also believes its results in fiscal 2000 were negatively impacted by concerns as to its viability due to potential cash shortfalls during much of fiscal 2000. There was no significant change in overall revenues from fiscal 1998 to fiscal 1999.

Sales by product groups

The table below shows sales consisting of creative products, business application products and other revenues consisting primarily of Linux operating system products. The comparative numbers have been reclassified to conform with current presentation.

	Year ended November 30
	2000	1999	1998
Creative products	$ 75,919	$ 106,592	$ 133,841
Business applications products	78,917	132,948	111,990
Other	2,651	3,511	996
Total sales	$157,487	$243,051	$246,827

Creative products revenues decreased 29% from $106.6 million in fiscal 1999 to $75.9 million in fiscal 2000. This decrease is primarily due to the release of CorelDRAW 10 Graphics Suite in the final month of the fiscal year. CorelDRAW 9 Graphics Suite was released in May 1999, resulting in the inclusion of approximately eight months of revenue in fiscal 1999 as opposed to one month of revenues of CorelDraw 10 Graphics Suite in fiscal 2000. In fiscal 1999, creative products revenues declined 20% from $133.8 million to $106.6 million due to CorelDRAW 8 being available for sale for the entire year in fiscal 1998. Creative products revenues are expected to increase approximately 20% in fiscal 2001 due primarily to increased demand for CorelDRAW 10 Graphics Suite, planned releases of updates to the products acquired from Metacreations Corporation and the release of CorelDraw 10 Graphics Suite for the MacIntosh operating system. Included in creative products revenues are consumer applications products which were relatively consistent from fiscal 1998 ($27.6 million) to fiscal 1999 ($24.0 million). In fiscal 2000, as Corel realigned itself and moved away from promoting these products, these revenues declined significantly and are no longer managed or accounted for as a separate segment.

Business application products revenues declined 41% from $132.9 million in fiscal 1999 to $78.9 million in fiscal 2000. This is due primarily to the lack of any major product launches in fiscal 2000. Sales for business applications products increased from $112.0 million in fiscal 1998 to $132.9 million in fiscal 1999 due to the release of the then latest version of the WordPerfect suite in May 1999. The prior version, Corel WordPerfect Suite 8, was released in fiscal 1997, therefore a 24 month period existed between releases resulting in a full year of revenue in 1998. With the planned release of WordPerfect Office 2002 in early spring 2001, localized only in International English and Canadian French, revenues for business applications products in fiscal 2001 are expected to remain at their fiscal 2000 levels.

Other revenues, related primarily to Corel LINUX OS, decreased 24% to $2.7 million in fiscal 2000 from $3.5 million in fiscal 1999 due to the Company's focus on its core products. Other revenues are expected to increase marginally in the future with the introduction of professional services and other revenue sources.

Sales by sales channels

Corel distributes its products primarily through distributors (as retail packaged products), OEM licences and corporate licences. The table below shows sales by sales channels:

	Year ended November 30
	2000	1999	1998
	(in thousands)
Retail packaged products	$80,069	$140,200	$153,623
OEM licenses	17,640	26,972	23,340
Corporate licenses	59,778	75,879	69,864
Total sales	$157,487	$243,051	$246,827

Retail packaged products and corporate licences are sold primarily through distributors. Sales from retail packaged products declined 43% from $140.2 million in fiscal 1999 to $80.1 million in fiscal 2000. The decline in retail packaged product sales is primarily due the decline in PC sales and the aforementioned change in the buying practices of retail distributors. In addition, for much of fiscal 2000, the core products were available only in releases nearing the end of their life cycle. Packaged product revenues decreased from $153.6 million in fiscal 1998 to $140.2 million in fiscal 1999 due to a shift in focus from retail packaged products to corporate licenses and Year 2000 pressure.

OEM channel sales are licence fees from original equipment manufacturers. These sales decreased 35% from $27.0 million in fiscal 1999 to $17.6 million in fiscal 2000. The decrease was due primarily to declining PC sales and products reaching the end of their life cycles. The increase to $27.0 million in fiscal 1999 from $23.3 million in fiscal 1998 was due primarily to increased OEM agreements for business applications products.

Corporate licenses declined 21% from $75.9 million in fiscal 1999 to $59.8 million in fiscal 2000. This decrease is primarily due to not having released new versions of WordPerfect during the year. The 9% increase from $69.9 million in 1998 to $75.9 million in fiscal 1999 was due to Corel's enhanced focus on corporate customers.

The channel mix is not expected to materially change in the coming year.

Sales by region

The table below shows sales by region:

	Year ended November 30
	2000	1999	1998
	(in thousands)
Canada	$13,181	$13,833	$14,942
U.S.A.	83,355	141,972	137,938
Europe	42,453	64,123	73,089
Other	18,498	23,123	20,858
Total sales	$157,487	$243,051	$246,827

Sales in North America declined 38% from $155.8 million in fiscal 1999 to $96.5 million in fiscal 2000. This is primarily due to products reaching the end of their life cycle and the aforementioned change in distributors' buying patterns. A general decline in the retail market in North America also contributed to slower sales. Revenues in North America are expected to increase marginally in 2001 as Corel increases its focus on the North American market.

Declining sales in Germany, the Netherlands and the United Kingdom resulted in European revenues declining 34% from $64.1 million in fiscal 1999 to $42.5 million in fiscal 2000. The decrease in sales in Europe from $73.1 million in fiscal 1998 to $64.1 million in fiscal 1999 reflects large declines in revenues from Germany and France. Revenues in Europe are expected to decline modestly in the coming year since WordPerfect Office 2002 will not be localized in many local languages as was done historically.

Corel's products are sold primarily in US dollars in all regions other than Europe. In fiscal 2000, Corel began selling in Euros for many of its European customers. The relative weakness of the Euro to the U.S. dollar in fiscal 2000 impacted sales slightly.

Cost of sales and gross profit

In cost of sales, Corel includes all costs associated with the acquisition of components, the assembly of finished products, product royalties, the amortization of software acquisition costs and shipping. Costs associated with warehousing are included in selling, general and administrative expenses. Deferred royalties and software acquired for integration and sale with Corel products that has been capitalized are currently being amortized over the greater of : a) the ratio that current gross revenues bear to the total of current and anticipated future gross revenues or, b) the straight line method over the remaining economic life generally estimated to be three to five years.

As products reach the end of their life cycle or as decisions are made to no longer actively market products, inventory then held may be in excess of estimated future sales of those products, consisting of finished goods and raw materials associated with those products. Such excess inventories would then be considered obsolete and would be written off. In fiscal 2000, the Company determined that $14.2 million of inventory was obsolete and written off. In addition, in the fourth quarter of 2000, the Company determined that $1.6 million of prepaid royalties had no future value as the associated products were no longer actively marketed, and as such the prepaid royalties were written off. This, combined with decreases in product prices, resulted in a decrease in gross margin from 76% in fiscal 1999 to 70% in fiscal 2000. The decrease in gross margin from 79% in fiscal 1998 to 76% in fiscal 1999 is attributable to lower sales, increased inventory obsolescence and valuation adjustments. On a go-forward basis, Corel anticipates gross margin in the high 70 to low 80 percent range.

Advertising Expenses

Advertising expenses include all marketing, advertising and trade show expenses. In fiscal 2000, advertising expenses decreased 31% from $48.0 million in fiscal 1999 to $33.3 million in fiscal 2000. This was due primarily to Corel's cost reduction plan that was implemented in May 2000. In fiscal 1999, these expenses increased 15% from $41.8 million in 1998 primarily as a result of print advertising and trade shows to promote the latest versions of Corel's products over the fourth fiscal quarter of that year. In fiscal 2001, Corel plans to release several new products, including WordPerfect Office 2002 and CorelDRAW 10 Graphics Suite for Macintosh. However, advertising expenditures are expected to remain consistent with the cost reduction plan, allowing for a better focus of the monies spent.

Selling, general and administrative expenses

All selling expenses (except for advertising expenses) are included in this category along with general and administrative expenses, including expenses associated with warehousing inventory. Selling, general and administrative expenses increased 4% from $82.2 million in fiscal 1999 to $85.7 million in fiscal 2000. While a cost reduction plan was implemented during the year, the benefits were not realized until the fourth quarter. There were a number of non-recurring charges such as severance, consulting fees and asset write-downs that resulted from the cost reduction plan implemented during the year.

The increase in selling, general and administration expenses to $82.2 million in fiscal 1999 from $77.7 million in fiscal 1998 resulted from new releases of Corel's two flagship products - CorelDRAW 9 Graphics Suite and WordPerfect Office 2000. Further expenses were incurred relating to Corel LINUX OS, which was also released during the year.

Selling, general and administrative expenses are expected to be reduced significantly in the future due to Corel's cost restructuring plan.

Research and development expenses

Research costs are expensed as incurred. Development costs related to software products developed for sale are expensed as incurred unless they meet the criteria for deferral under generally accepted accounting principles.

Research and development expenses are reported net of Canadian investment tax credits

In fiscal 2000, gross research and development expenses were reduced by $4.5 million (9%) to $44.4 million from $48.9 million primarily as a result of the cost reduction plan implemented in June 2000. Netted against gross research and development expenses is $0.5 million and $8.9 million of Canadian investment tax credits in fiscal 2000 and fiscal 1999 respectively.

In fiscal 1999, investment tax credits of $8.9 million related to the 1997 through 1999 taxation years were recognized for accounting purposes as a result of an audit by the Canada Customs and Revenue Agency being completed during the year. Gross research and development expenses decreased over 1998 levels primarily due to employees that were terminated as part of the restructuring in 1998 not being replaced.

Research and development expenses are expected to decline significantly in the future. This is due primarily to the cost reduction plan that resulted in the consolidation of the Irish localization facilities. Corel will not be localizing as many products on a go forward basis. Also, with Corel shifting its focus to two main business lines, fewer resources will be used to develop Corel LINUX OS.

Depreciation and amortization expenses

Depreciation and amortization expenses, which do not include the amortization of purchased software, increased $1.0 million in fiscal 2000 to $7.4 million from $6.4 million in fiscal 1999 as result of significant purchases of computer equipment made in the fourth quarter of fiscal 1999 having a full year of amortization. The decrease to $6.4 million in fiscal 1999 from $12.4 million in fiscal 1998 is a result of an aging asset base. In fiscal 1998, a number of assets were written off as a result of the restructuring that took place.

Restructuring charge

Corel incurred a restructuring charge of $15.9 million in the third quarter of fiscal 1998. The charge relates to the costs associated with moving the research and development activity in Orem, Utah to the Ottawa, Ontario location. Further discussion of the charge and its components may be found in Note 14 of the 2000 Consolidated Financial Statements.

Interest expenses

Interest expenses relates to Novell obligations for the acquisition of the WordPerfect technology from Novell, Inc. and is netted with interest income from term deposits. In fiscal 2000, $3.0 million was accrued for interest charges relating to proposed reassessments of prior year Canadian tax returns. The decrease from $1.1 million in fiscal 1998 to $0.2 million in fiscal 1999 is a result of the decrease in the outstanding Novell obligation.

Income taxes

Corel's effective tax rates for fiscal 2000, 1999 and 1998 were 9.8%, 29.8% and 14.9%; respectively. These effective tax rates vary from Corel's statutory tax rate of 44.3% primarily due to foreign tax rate differences associated with Corel's international operations. In fiscal 1999, Corel recorded a tax benefit of accounting losses in the 1996 and 1997 taxation years.

Cost reduction plan

Cost reduction actions commenced in late April 2000 when Corel began to curtail discretionary spending, particularly in the area of direct marketing and travel. In early May 2000, Corel proceeded to identify broader areas of spending cuts, namely in the areas of future hirings, capital purchases and other discretionary purchases. In mid-May 2000, Corel began to consider employee terminations and commenced a formal process of planning for spending cuts that would reduce its quarterly expenses to a level commensurate with expected achievable revenues. Consideration was also given to the amount of spending that had occurred in the first quarter and spending estimates for the second quarter, with a normalization factor for what was considered non-recurring. In summary, this called for a quarterly cost structure of $45.0 million or a $10.0 million quarterly reduction from normalized spending rates.

On May 16, 2000, Corel announced that it had undertaken a cost reduction plan with the intention of eliminating $40 million in costs on an annualized basis. The cost reduction plan has been implemented in a series of steps.

On June 8, 2000, Corel announced a reduction in its workforce of approximately 320 positions from a combination of employee terminations, termination of contract positions, elimination of vacant positions, attrition and termination of the services of independent contractors. The costs of severance and other termination payments, estimated at $1.6 million, were recorded in Corel's third fiscal quarter ended August 31, 2000. The estimated annualized cost saving from the workforce reduction, without taking into account one time implementation charges, is expected to be approximately $11.0 million.

On September 6, 2000, Corel announced that it had identified the remaining components of the previously targeted $40.0 million in expenditure cuts, designed to realign its costs with its expected achievable revenues. As part of this plan, Corel announced the proposed consolidation of its engineering operations based in Dublin, Ireland, to its corporate headquarters in Ottawa, Canada. A total of 139 positions at the Dublin facility were eliminated as a result of the move with the estimated costs of severance and other termination payment, being approximately $0.85 million recorded in the third quarter of fiscal 2000 and approximately $1.4 million in additional costs recorded in the fourth quarter of fiscal 2000.

Liquidity and capital resources

As of November 30, 2000, Corel's principal sources of liquidity included cash and cash equivalents of approximately $127.4 million, and trade accounts receivable of $28.6 million. Cash equivalents consist of overnight call loans to a major Canadian bank totalling $14.0 million and a loan of $110.0 million to a major Canadian corporation, guaranteed by a major Canadian bank. At November 30, 2000, $1.1 million of cash was restricted for corporate credit cards and severance payments related to the closing of the Irish localization facilities.

Cash used in operations was $30.0 million for fiscal 2000 compared to cash provided by operations of $6.3 million for fiscal 1999. The decrease of $36.3 million was primarily due to the net loss of $55.3 million in fiscal 2000 as compared to the net income of $16.7 million in fiscal 1999.

Trade accounts receivable, net of provisions, decreased from the November 30,1999 balance of $54.8 million to $28.6 million as a result of a decrease in gross accounts receivable. This was a result of lower sales volume that was achieved during the year. This reduction in gross accounts receivable was off-set by a reduction in the provision for sales returns to reflect the reduced level of products in the distribution channel.

Accounts payable and accrued liabilities decreased from $50.3 million on November 30, 1999 to $28.4 million at November 30, 2000 mainly due to decreases in volume related to the cost reduction plan as well as payment of many of the previously accrued liabilities.

Financing activities provided $146.4 million in fiscal 2000 compared to $7.0 million in fiscal 1999. The source of cash in fiscal 2000 through financing activities was the issuance of common and preferred shares. During the year, the issuance of common shares through employee stock options and a public offering of common shares and common share purchase warrants resulted in net proceeds of $22.3 million. In fiscal 1999, $12.8 million of common shares were issued to employees. In fiscal 2000, the issuance of preferred shares to Microsoft Corporation provided $130.7 million. The use of cash in fiscal 2000 and fiscal 1999 was the repayment of the Novell obligations. Repayment of Novell obligations decreased in fiscal 2000 as a result of Corel reaching an agreement with Novell whereby the balance due was fixed and will be repaid in three equal payments of $5.0 million. One of these payments was made prior to November 30, 2000.

Investing activities used $7.0 million in fiscal 2000 compared to $17.7 million in fiscal 1999. The source of cash from investing activities was primarily proceeds from sales of shares of GraphOn Corporation ("GraphOn") of $14.6 million. Uses of cash for investing activities includes expenditures for capital assets of $19.5 million in the fiscal 2000 compared to $19.2 million in fiscal 1999.

On September 19, 2000, the Company announced it had entered into a share purchase agreement with an institutional investor. Subject to the terms and conditions of this agreement, the Company may issue and sell to the investor up to 14,690,000 shares in periodic draw down periods over 24 months, if all associated warrants are exercised. Corel has not issued any shares related to this agreement as of November 30, 2000.

At November 30, 2000, Corel's capital resource commitments consisted primarily of lease arrangements for office space. No significant commitments exist for future capital expenditures. Corel believes available balances of cash and cash equivalents combined with the proceeds of the shares issued and issuable as described above are sufficient to meet its working capital requirements for the foreseeable future.

Other Matters

New accounting pronouncements

In fiscal 1998, the Financial Accounting Standards Board ("FASB") issued SFAS 133, "Accounting for Derivative Instruments and Hedging Activities", ("SFAS 133") which establishes standards for derivative instruments and hedging activities. It requires that all derivatives be recognized as either assets or liabilities on the Balance Sheet and be measured at fair value. SFAS 133 is effective for fiscal years beginning after June 15, 1999, which is the fiscal year beginning December 1, 1999 for the Company. Prior periods should not be restated. In June 1999, the FASB issued SFAS No. 137, which delays the effective date of SFAS 133 until fiscal years beginning after June 15, 2000, which is the fiscal year beginning December 1, 2000 for the Company. The Company believes the adoption of this pronouncement will not have a material impact on its results from operations or financial position.

In fiscal 2000, the United States Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin ("SAB") No. 101, Revenue Recognition in Financial Statements and its related interpretations. The SAB summarizes certain of the SEC staff views in applying generally accepted accounting principles to revenue recognition in financial statements. This SAB is effective beginning the Company's first quarter of fiscal 2001.The Company does not expect the adoption of this SAB to have a material impact on its results of operations or financial position.

Year 2000

The Year 2000 issue arises because many computerized systems use two digits rather than four to identify a year. Date-sensitive systems may recognize the year 2000 as 1900 or some other date, resulting in errors when information using Year 2000 dates are processed. In addition, similar problems may arise in some systems which use certain dates in 1999 to represent something other than a date. Although the change in date has occurred, it is not possible to conclude that all aspects of the Year 2000 issue that may affect the entity, including those related to customers, suppliers or other third parties, have been fully resolved.

Item 7A. Financial Instruments - Quantitative And Qualitative Disclosures About Market Risk

Financial Instruments

Interest rate risk

Corel's exposure to market risk for changes in interest rates relates primarily to its investment portfolio of cash equivalents and marketable securities. Corel does not use derivative financial instruments in its investment portfolio. The stated objectives of Corel's investment guidelines are safety of principal, liquidity, maximization of yield, and diversification of risk. The Company places its investments with high credit quality issuers, principally term deposits with a major Canadian financial institution. The marketable securities portfolio includes only those securities with active secondary or resale markets to ensure portfolio liquidity. A substantial reduction in overall interest rates could significantly reduce Corel's interest income.

The table below presents principal amounts and related weighted average interest related by date of maturity for Corel's interest bearing investment portfolio. Weighted average interest rates include the after-tax yield on a debt security of a major Canadian corporation. At November 30, 2000, the total investment portfolio had maturity dates prior to December 31, 2000.

		Weighted average	Fair value at
	Maturity balance	after-tax yield	November 30, 2000
Cash equivalents	$14,002	4.16%	$14,002
Debt securities	110,596	4.29%	110,040
Total investment portfolio	$124,598	4.28%	$124,042

Foreign currency risk

Corel conducts business in various foreign currencies, primarily in Canada and Europe and to a lesser extent Australia, Latin America, Japan and other Asian countries. Corel monitors its foreign currency exposure. As of November 30, 2000, Corel had no foreign currency hedges outstanding. Corel has mitigated, and expects to continue to mitigate, a portion of its currency exposure through decentralized sales, marketing and support operations in which all costs are local currency based.

Item 8. Financial Statements and Supplementary Data

Corel Corporation

Index to Consolidated Financial Statements

Management's Report

Auditors' Report

Consolidated Financial Statements:

Consolidated Balance Sheets at November 30, 2000 and 1999

Consolidated Statements of Operations for the years ended November 30, 2000, 1999 and 1998

Consolidated Statements of Shareholders' Equity for the years ended November 30, 2000,

1999 and 1998

Consolidated Statements of Cash Flows for the years ended November 30, 2000, 1999 and 1998

Notes to Consolidated Financial Statements

Management's Report

Management is responsible for the preparation of the Company's consolidated financial statements. Management believes that the consolidated financial statements fairly reflect the form and substance of transactions and that the consolidated financial statements reasonably present the Company's financial condition and results of operations. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in Canada ("Canadian GAAP"). These principles are also generally accepted in the United States ("US GAAP") in all material respects except as disclosed in Note 16. Management has included in the Company's consolidated financial statements amounts based on estimates and judgements that it believes are reasonable under the circumstances.

PricewaterhouseCoopers LLP, the independent auditors of the Company, have audited the Company's consolidated financial statements in accordance with generally accepted auditing standards, and they provide an objective, independent review of the fairness of reported operating results and financial position.

The Board of Directors of the Company has an Audit Committee which meets with financial management and the independent auditors to review accounting, auditing, internal accounting controls, and financial reporting matters.

Derek J. Burney John Blaine

President and CEO Executive Vice-President Finance,

CFO and Treasurer

Auditors' Report to the Shareholders

We have audited the consolidated balance sheets of Corel Corporation as at November 30, 2000 and November 30, 1999 and the related consolidated statements of operations, shareholders' equity and cash flows for each of the three years ended November 30, 2000, 1999 and 1998. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards in both Canada and the United States. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at November 30, 2000 and November 30, 1999, and the results of its operations and its cash flows for the years ended November 30, 2000, 1999 and 1998 in accordance with generally accepted accounting principles in Canada.

As discussed in Note 17 to these consolidated financial statements, the Company has restated these consolidated financial statements as they relate to the Novell royalty obligation. Accordingly, our previous report dated January 26, 2001 has been withdrawn and replaced herein. However, our report does not extend to any information related to those years prior to the year ended November 30, 1998, which were reported on by the previous auditor.

PricewaterhouseCoopers LLP

Chartered Accountants

Ottawa, Canada

January 26, 2001, except for Note 17 which is as of September 5, 2001

	As at November 30
	2000	1999 (as restated)
Assets
Current assets:
Cash and cash equivalents	$ 127,430	$ 18,021
Restricted cash	1,136
Accounts receivable
Trade	28,620	54,770
Other	773	3,954
Inventory	3,117	13,567
Income taxes recoverable		5,135
Future tax asset	479	1,642
Prepaid expenses	1,050	2,042
Total current assets	162,605	99,131
Investments	11,996	2,873
Future tax asset	965
Deferred financing charges	550
Capital assets	42,471	37,712
Total assets	$ 218,587	$ 139,716
Liabilities and shareholders' equity
Current liabilities:
Accounts payable and accrued liabilities	$ 28,441	$ 50,284
Current portion of Novell obligations	10,000	6,594
Income taxes payable	6,595
Deferred revenue	10,907	18,472
Total current liabilities	55,943	75,350
Commitments and contingencies
Shareholders' equity
Share Capital
Preferred shares (000's), no par value, unlimited authorized; 24,000 and nil
Series A issued and outstanding at November 30, 2000 and 1999, respectively
Common shares (000's), no par value, unlimited authorized; 73,641 and
65,532 issued and outstanding at November 30, 2000 and 1999, respectively	371,890	222,155
Contributed surplus	4,990	1,099
Deficit	(214,236)	(158,888)
Total shareholders' equity	162,644	64,366
Total liabilities and shareholders' equity	$ 218,587	$ 139,716

On behalf of the Board

James Baillie	Jean-Louis Malouin
Director	Director

(See accompanying Notes to Consolidated Financial Statements)

Consolidated Statements of Operations

(in thousands of US$, except share and per share data)

	Year ended November 30
	2000	1999	1998
Sales	$ 157,487	$ 243,051	$ 246,827
Cost of sales	47,025	59,516	51,561
Gross profit	110,462	183,535	195,266
Expenses:
Advertising	33,258	47,964	41,826
Selling, general and administrative	85,662	82,229	77,736
Research and development	43,867	40,049	71,935
Depreciation and amortization	7,354	6,443	12,368
Restructuring charge			15,880
Settlement proceeds		(6,342)
Loss (gain) on foreign exchange	1,371	(246)	911
	171,512	170,097	220,656
Income (loss) from operations	(61,050)	13,438	(25,390)
Gain on sale of investment	14,585
Interest expense	(1,305)	(190)	(1,112)
Income (loss) before the undernoted	(47,770)	13,248	(26,502)
Income taxes (expense) recovery:
Current	(4,507)	4,799	(4,088)
Future	(198)	(853)	142
	(4,705)	3,946	(3,946)
Share of loss of equity investments	(2,873)	(478)
Net income (loss)	$ (55,348)	$ 16,716	$ (30,448)
Income (loss) per share:
Basic	$ (0.80)	$ 0.27	$ (0.51)
Diluted	$ (0.80)	$ 0.27	$ (0.51)
Weighted average number of common shares
outstanding (000's) :
Basic	69,498	62,194	59,433
Diluted	69,498	63,042	59,433

(See accompanying Notes to Consolidated Financial Statements)

Consolidated Statements of Shareholders' Equity

(in thousands of US$ except share data)

	Number of Shares (000's)		Share capital	Contributed surplus	Deficit	Total shareholders' equity
	Common	Preferred
Balance at November 30, 1997	59,740		$ 204,235	$ 730	$ (145,156)	$ 59,809
Issuance of common shares
pursuant to stock options	132		209			209
Cancellation of common shares	(394)		(987)			(987)
Discount on shares repurchased			(369)	369
Net loss					(30,448)	(30,448)
Balance at November 30, 1998	59,478		203,088	1,099	(175,604)	28,583
Issuance of common shares
pursuant to stock options	5,054		12,767			12,767
Issuance of common shares
for acquisitions	1,000		6,300			6,300
Net Income					16,716	16,716
Balance at November 30, 1999	65,532		222,155	1,099	(158,888)	64,366
Issuance of common shares
pursuant to stock options	798		3,390			3,390
Issuance of common shares and
warrants for cash	7,299		15,630	3,291		18,921
Issuance of common shares pursuant
to warrants	12		36			36
Issuance of preferred shares for cash		24,000	130,679			130,679
Issuance of warrants for services				600		600
Net loss					(55,348)	(55,348)
Balance at November 30, 2000	73,641	24,000	$ 371,890	$ 4,990	$ (214,236)	$ 162,644

(See accompanying Notes to Consolidated Financial Statements)

Consolidated Statements of Cash Flows

(in thousands of US$, as restated)

	Year ended November 30
	2000	1999	1998
Operating activities:
Net Income (loss)	$ (55,348)	$ 16,716	$ (30,448)
Items which do not involve cash or cash equivalents:
Depreciation and amortization	17,904	15,539	22,070
Bad debt expense	2,357	31
Write down of assets	984
Future income taxes	198	853	(142)
Gain on sale of investment	(14,585)
Gain on disposal of assets		(809)
Share of loss in equity investments	2,873	478
Write down of assets included in restructuring charge			3,086
Write down of short-term investment			1,908
Changes in operating assets and liabilities:
Restricted cash	(1,136)
Accounts receivable	26,974	(12,157)	6,595
Inventory	10,450	3,150	(5,686)
Income taxes recoverable	5,135	(5,135)
Prepaid expenses	992	2,576	(2,027)
Accounts payable and accrued liabilities	(25,843)	(7,925)	10,146
Income taxes payable	6,595	(7,549)	3,346
Deferred revenue	(7,565)	539	3,809
Net cash provided by (used in) operating activities	(30,015)	6,307	12,657
Financing activities:
Issuance of common shares	19,056	12,767	209
Issuance of preferred shares	130,679
Issuance of warrants	3,291
Shares repurchased for cancellation			(987)
Reduction of Novell obligations	(6,594)	(5,728)	(6,040)
Net cash provided by (used in) financing activities	146,432	7,039	(6,818)
Investing activities:
Proceeds on sale of investments	14,585	2,922	1,624
Purchase of investments	(2,356)	(1,561)
Purchase of capital assets	(19,511)	(19,198)	(10,359)
Proceeds on disposal of assets	274	119	305
Net cash used in investing activities	(7,008)	(17,718)	(8,430)
Increase (decrease) in cash and cash equivalents	109,409	(4,372)	(2,591)
Cash and cash equivalents at beginning of year	18,021	22,393	24,984
Cash and cash equivalents at end of year	$ 127,430	$ 18,021	$ 22,393
Supplemental non-cash information:
Non-monetary investment in Hemera Technologies Inc.	$ 9,727

(See accompanying Notes to Consolidated Financial Statements)

Notes to Consolidated Financial Statements

1. Summary of significant accounting policies

All dollar amounts included herein are expressed in thousands of US$ unless otherwise noted. Certain per share information is expressed in units of US$ unless otherwise noted.

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in Canada ("Canadian GAAP"). These principles are also generally accepted in the United States ("US GAAP") in all material respects except as disclosed in Note 16.

Basis of consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Corel Corporation Limited, Corel International Corporation, Corel Inc. and Corel Corporation (U.S.A.). All material intercompany transactions and balances have been eliminated. The Company follows the equity method of accounting for investments in other companies where it holds 20% or more of the outstanding voting shares and has the ability to exert significant influence. Under the equity method the Company records its initial investment at cost and records its pro rata share of earnings or losses of equity investments in its results of operations. Certain amounts for periods ended prior to November 30, 2000 have been reclassified to conform to the current year presentation.

Estimates and assumptions

Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and the disclosure of contingent assets and liabilities. Examples include the provisions for returns and bad debts, the length of product cycles and capital asset lives. Actual results may differ from these estimates.

Software revenue recognition

The Company recognizes revenue in accordance with Statement of Position 97-2, "Software Revenue Recognition", ("SOP 97-2") issued by the American Institute of Certified Public Accountants in October 1997. During the year ended November 30, 2000, the Company adopted the Statement of Position 98-9, "Modification of SOP 97-2, Software Revenue Recognition with Respect to Certain Transactions" ("SOP 98-9") issued in December 1998. The adoption of SOP 98-9 has not had a material impact on the Company's financial results.

The Company recognizes revenue from packaged software and license fees when the software is delivered, there is persuasive evidence that an arrangement exists, the fee is fixed and determinable and collection is probable. Sales to distributors are subject to agreements allowing various rights of return and price protection. The Company provides for estimated future returns, exchanges and price protection. Where telephone support is included for a limited time (post contract support or "PCS", generally for 90 days) together with the license fee, the entire license fee is recognized upon delivery of the product and the insignificant costs to provide the support are accrued. Where support is provided together with an annual licensing fee, the entire fee is deferred and recognized ratably over the term of the license agreement since the Company does not have vendor specific objective evidence of fair value of this PCS. Revenue from professional services and other services are recognized when the services are delivered.

Research and development costs

Research costs are expensed as incurred. Development costs related to software products developed for sale are expensed as incurred unless they meet the criteria for deferral under generally accepted accounting principles.

Cash and cash equivalents

Cash includes cash equivalents, which are investments that are highly liquid and have terms to maturity of three months or less at the time of acquisition.

Restricted cash

The Company maintains restricted cash in term deposits with major financial institutions as security for corporate credit cards

issued by such financial institutions.

Inventory

Inventory of product components is valued at the lower of average cost and replacement cost, and finished goods are valued at the lower of average cost and net realizable value.

Capital assets

Capital assets are recorded at cost. Amortization of licences commences with the market release of each new software product and version. Depreciation and amortization are calculated using the following rates and bases:

Furniture and equipment	20 - 33.3% declining balance
Computer equipment	33.3% straight line
Research and development equipment	20 - 50% declining balance
Leasehold improvements	Straight line over the term of the lease
Licences, purchased software, deferred royalties, clipart libraries and photo CD libraries	The greater of: a) the ratio that current gross revenues bear to the total of current gross revenues and anticipated future gross revenues or, b) the straight line method over the remaining economic life, generally estimated to be three to five years

The Company regularly reviews the carrying value of its capital assets. If the carrying value of its capital assets exceeds the amount recoverable, a write-down is charged to the consolidated statement of operations.

Income taxes

On December 1, 1999, the Company adopted the asset and liability method for determining income taxes as prescribed by the Canadian Institute of Chartered Accountants ("CICA") 3465 - "Income Taxes" ("CICA 3465"). Under this method, future tax assets and liabilities are recognized for the estimated tax recoverable or payable which would arise if assets were recovered and liabilities settled at the financial statement carrying amounts. Future tax assets and liabilities are measured using substantially enacted tax rates expected to apply to taxable income in the years in which temporary differences are expected to be recovered or settled. Changes to these balances are recognized in income in the period in which they occur.

Foreign currency

The functional currency of the Company and its subsidiaries, which are accounted for as integrated foreign operations, is the US dollar. In accordance with the CICA 1650 - "Foreign Currency Translation", monetary assets and liabilities denominated in foreign currencies, other than the functional currency, are remeasured at the closing period-end rates of exchange. Non-monetary items and any related amortization of such items are remeasured at the rates of exchange in effect when the assets were acquired or obligations incurred. All other income and expense items have been remeasured at the average rated prevailing during the respective periods. The gains or losses resulting from the remeasurement of these amounts have been reflected in earnings in the respective periods.

Investment tax credits

Investments tax credits ("ITCs"), which are earned as a result of qualifying research and development expenditures, are recognized when the expenditures are made and their realization is reasonably assured, and are applied to reduce research and development expense in the year.

Stock options

The Company has stock option plans as described in Note 9. No compensation expense is recognized when shares or stock options are issued to employees. Any consideration paid by employees on the exercise of stock options is credited to share capital.

2. Financial instruments

The carrying amounts for cash and cash equivalents, restricted cash, accounts receivable, accounts payable, accrued liabilities and Novell obligations approximate fair value due to the short maturity of these instruments unless otherwise noted.

Cash equivalents include a $14.0 million term deposit issued by a major North American bank and a loan of $110.0 million to a major Canadian corporation, which is guaranteed by a major North American bank, with maturity on December 27, 2000. Subsequent to year end, the loan, including accrued interest, was repaid in full.

Concentration of credit risk, with respect to accounts receivable, is limited due to the diversity of the Company's channel arrangements. The Company has credit evaluation, approval and monitoring processes intended to mitigate potential credit risks. Ingram Micro Inc. accounted for $10.4 million (36.5%) and $27.1 million (49.5%) of accounts receivable at November 30, 2000 and November 30,1999, respectively.

3. Inventory

	As at November 30
	2000	1999
Product components	$ 1,424	$ 8,582
Finished goods	1,693	4,985
	$ 3,117	$ 13,567

4. Investments

	As at November 30
	2000	1999
Equity investments
Hemera Technologies Inc.	$ 9,727
LinuxForce, Inc.	243
Rebel.com Inc.		$ 2,873
Alchemy Software Development Limited
	9,970	2,873
Investments recorded at cost, including GraphOn Corporation	2,026
	$ 11,996	$ 2,873

Hemera Technologies Inc.

On July 17, 2000, the Company purchased and currently maintains a 23% interest in Hemera Technologies Inc., a privately held company. As consideration for these shares, the Company transferred its GraphicCorp division and related assets to Hemera Technologies Inc. As of the effective date of the transaction, the fair value of the GraphicCorp division and its related assets was estimated at $9.7 million and the shares were valued at this amount. No gain or loss was recognized on the transfer. In fiscal 2000, the Company's share of Hemera Technologies Inc.'s operating results was nominal.

LinuxForce, Inc.

In December 1999, the Company purchased and currently maintains, a 33% interest in LinuxForce Inc., a privately held company, for cash. The Company also holds a three year option to purchase another 33% of LinuxForce, Inc. In 2000, the Company's share of LinuxForce, Inc.'s operating results was nominal.

Rebel.com Inc.

On February 17, 1999, the Company purchased and currently maintains, a 25% interest in Rebel.com Inc., a privately held company for $3.4 million. The Company's share of the net book value of the underlying assets was $1.3 million. The remaining balance of the purchase price of $2.1 million had been allocated to goodwill and was being amortized on a straight-line basis over three years. The fair value of the assets given up to purchase the Company's share of Rebel.com Inc. was as follows:

Cash	$ 1,561
Capital assets	1,341
Inventory	381
Accounts receivable	68
Total purchase price	$ 3,351

In 2000, the Company's share of Rebel.com Inc.'s net loss was $1.2 million which has been deducted from the carrying value of the investment, reducing the investment in Rebel.com Inc. to nil. Due to the magnitude of the losses, the remaining goodwill on the investment has been written down to nil.

Alchemy Software Development Limited

On November 28, 2000, the Company purchased and currently maintains, a 25% interest in Alchemy Software Development Limited, a privately held company. At the same time, the Company sold its CATALYST software and related assets to Alchemy Software Development Limited. The transaction was accounted for as a non-monetary transaction and the net book value of the assets sold was nil, resulting in the shares being fair valued at nil with no gain or loss recognized. In 2000, the Company's share of Alchemy Software Development Limited's operating results was nominal.

Investments recorded at cost, including GraphOn Corporation ("GraphOn")

On December 31, 1998, the Company sold its jBridge technology to GraphOn. In consideration for the transfer of technology, GraphOn issued to the Company 3,886,503 shares of common stock of GraphOn and a warrant to purchase up to 388,650 shares of additional common stock. The assets transferred had a nominal value in the Company's financial statements.

On July 12, 1999, GraphOn completed a merger with Unity First Acquisition Corp. ("Unity"), a publicly traded acquisition corporation. As part of the merger, Unity changed its name to GraphOn. Under the terms of the merger agreement, GraphOn shareholders received a fixed exchange ratio of 0.5576 share of Unity common stock for each share of GraphOn common stock. As result of the merger, the Company held 2,167,114 shares of common stock, representing 19.5% of the merged company and, during the year, exercised warrants to purchase 216,711 shares of common stock at an exercise price of $1.79 per share.

During fiscal 2000, the Company sold a total of 1,190,001 shares of GraphOn for a realized gain of approximately $14.6 million. The Company still owns 1,193,824 shares of common stock (including warrants exercised above), recorded at $0.4 million representing 8.1 % of total shares outstanding which, as of November 30, 2000, had a market value of $1.50 per share for an aggregate fair value of $1.8 million. The Company has accounted for the cost of this investment under the first-in, first-out method.

Other investments, at cost, totaled $1.6 million.

5. Capital assets

	November 30, 2000		November 30, 1999
	Cost	Accumulated amortization	Cost	Accumulated amortization
Furniture and equipment	$14,463	$10,877	$14,673	$9,580
Computer equipment	74,462	65,866	71,954	62,202
Research and development equipment	12,400	9,947	12,664	8,649
Leasehold improvements	3,707	3,426	3,329	2,650
Licenses, purchased software and deferred royalties	94,926	67,371	65,476	57,845
Clipart libraries and photo CD libraries			19,257	8,715
	199,958	$ 157,487	187,353	$ 149,641
Less: Accumulated amortization	157,487		149,641
Net book value	$42,471		$37,712

6. Accounts payable and accrued liabilities

	As at November 30
	2000	1999
Trade accounts payable	$ 11,518	$ 30,571
Accrued payroll	4,005	5,073
Accrued liabilities	5,918	14,640
Metacreations payable	4,000
Microsoft accrual	3,000
	$ 28,441	$ 50,284

The Metacreations payable relates to capital asset purchases during the year. The Microsoft Corporation ("Microsoft") accrual relates to obligations under the technology and services agreement as further discussed in Note 12.

7. Income taxes

The Company operates in several tax jurisdictions. Its income is subject to varying rates of tax, and losses incurred in one jurisdiction cannot be used to offset income taxes payable in another.

The income (loss) before income taxes consisted of the following:

	Year ended November 30
	2000	1999	1998
Domestic income (loss)	$ 8,779	$ 11,491	$ (26,002)
Foreign income (loss)	(56,549)	1,757	(500)
Income (loss) before income taxes	$ (47,770)	$ 13,248	$ (26,502)

The income taxes (expense) recovery consist of the following:

	Year ended November 30
	2000	1999	1998
Domestic:
Current income taxes	$ (3,913)	$ (2,098)	$ (2,530)
Future income taxes	529	122	(666)
	(3,384)	(1,976)	(3,196)
Foreign:
Current income taxes	(594)	6,897	(1,558)
Future income taxes	(727)	(975)	808
	(1,321)	5,922	(750)
Income taxes (expense) recovery	$ (4,705)	$ 3,946	$ (3,946)

The Company has foreign non-capital loss carryforwards of $180 million, which begin to expire in 2003.

A reconciliation of the combined Canadian federal and provincial income tax rate with the Company's effective income tax rate is as follows:

	Year ended November 30,
	2000	1999	1998
Expected statutory rate	44.04%	44.62%	44.62%
Expected income taxes (expense) recovery	$ 21,038	$ (5,911)	$ 11,826
Effect of foreign tax rate differences	(21,865)	(7,048)	(7,513)
Change in valuation allowance	(6,470)	16,783	(9,089)
Permanent differences	494
Other	1,579
Superallowance	519	122	830
Income taxes (expense) recovery	$ (4,705)	$ 3,946	$ (3,946)

The primary temporary differences which gave rise to future taxes at November 30, 2000 and 1999 are:

	Year ended November 30,
	2000	1999
Current
Reserves	$ 2,807	$ 3,100
Accrued royalties	1,000
Investment tax credits		2,000
Share issue costs	241
	4,048	5,100
Less: valuation allowance	(3,569)	(3,458)
Future tax asset	$ 479	$ 1,642
Long-term
Net operating loss carryforwards	$ 19,304	$ 11,200
Depreciation	3,344	9,400
Share issue costs	724
Royalties not yet deducted for tax purposes		1,300
	23,372	21,900
Less: valuation allowance	(22,407)	(21,900)
Future tax asset	$ 965	$

The valuation allowance for future taxes is required due to the Company's operating history and management's assessment of various uncertainties related to their future realization. Since the realization of future tax assets is dependent upon generating sufficient taxable income in the tax jurisdictions which gave rise to the future tax asset, the amount of the valuation allowance for future taxes may be reduced if it is demonstrated that positive taxable income in the various tax jurisdictions is sustainable in the future.

8. Novell obligations

The Novell obligations comprised royalty and product return obligations pursuant to the March 1, 1996 acquisition of the WordPerfect family of software programs and related technologies from Novell, Inc. ("Novell").

The Company was obligated at the date of acquisition, to pay royalties at a rate of 2% of its net revenues to Novell to a maximum of a then present value of $30.0 million imputing a 10% discount rate. The Company has recorded payments on this obligation as royalty expense included in cost of sales.

On October 30, 2000, the Company agreed to pay Novell the total sum of $15.0 million representing the present value of the future royalty obligation referred to above. The first payment was made on October 31, 2000 with the remaining two payments of $5.0 million each due January 24, 2001 and April 23, 2001. This $15.0 million represents a prepayment of otherwise future payable royalties and the Company has deferred this amount accordingly. These deferred royalties are being amortized to cost of sales over either 3 years, being the estimated remaining useful life of the underlying products, or at 2% of net revenues, whichever is greater.

9. Share capital

Issuance of Series A preferred shares

On October 2, 2000, the Company issued 24,000,000 Series A participating, convertible, non voting, non redeemable preferred shares to Microsoft for total gross proceeds of $135.0 million ($5.625 per share). Each preferred share is convertible into one common share but not in the hands of Microsoft or its affiliates. As part of the share purchase agreement the Company is obligated to file, with the United States Securities and Exchange Commission ("SEC"), a resale registration statement for 24,000,000 common shares underlying these preferred shares.

The dividend rights are the same as for common shares, other than dividends or other distributions to the extent payable in the form of common shares. Dividends on each full and each fractional Series A preferred share shall be cumulative.

In the event of liquidation of the Company, the greater of $5.625 per share purchase price, and the aggregate amount that could be distributed to common shareholders if these preferred shares did not exist, shall be distributed. Both are adjusted to include all accrued and unpaid dividends whether or not earned or declared. If such payment is made, Series A preferred shareholders will have no further claim on assets.

Issuance of common shares

On June 28, 2000, the Company issued 7,299,270 common shares and 3,649,635 common share purchase warrants at CDN $4.11 per unit for total gross proceeds of CDN $30.0 million. The values assigned to each of the components of the unit were based on their relative fair values at the date of the transaction. The warrants are exercisable until June 27, 2001 at a price of CDN $4.56 per common share. In the event that all of the warrants are exercised, the Company will issue an additional 3,649,635 common shares, resulting in gross proceeds of CDN $16.6 million. As at November 30, 2000, 11,659 warrants have been exercised for gross proceeds of CDN $53,165.

Equity line financing

On October 3, 2000, the Company completed a standby-financing share purchase agreement with an institutional investor. Subject to the terms and conditions of this agreement, the Company may issue and sell to the investor up to 14,690,000 shares in periodic draw down periods over 24 months if all associated warrants are exercised. At November 30, 2000, the Company has not issued or sold any shares under this arrangement. However, pursuant to the terms of the arrangement the Company has issued 169,500 warrants to the investor and 56,500 warrants to each of its advisors, Whale Securities Co., L.P. and Richard Geyser. The warrants are exercisable at any time until October 3, 2003 at $3.91 per share for the investor and $4.28 per share by Whale Securities Co., L.P. and Richard Geyser. At November 30, 2000, no warrants have been exercised. The Company has deferred $0.6 million in financing charges representing the fair value of the warrants issued to secure this financing. This commitment fee is being amortized over 24 months.

Stock option plans

The Company's stock option plans are administered by the Compensation Committee which is a subcommittee of the Board of Directors. The Compensation Committee designates eligible participants to be included under the plans and designates the number of options and share price of the options, subject to applicable securities laws and stock exchange regulations. At November 30, 2000, there were approximately 13.9 million and 4.0 million common shares reserved for issuance under the Corel Corporation Stock Option Plan and the Corel Corporation Stock Option Plan 2000, respectively. Information with respect to stock option activity for 1998, 1999 and 2000 is as follows:

		Price per share(CDN$)
	Number of shares (000's)	Range	Weighted average
Outstanding at November 30, 1997	6,158	$ 4.00 - $ 22.38	$9.17
Granted	3,422	2.10 - 4.10	3.03
Exercised	(132)	3.00 - 3.00	3.00
Expired	(1,167)	7.70 - 19.67	11.87
Outstanding at November 30, 1998	8,281	2.10 - 22.38	8.65
Granted	3,022	3.37 - 11.70	3.41
Exercised	(5,054)	2.10 - 13.50	4.03
Forfeited	(1,883)	2.10 - 13.50	7.06
Expired	(1,313)	2.10 - 22.38	10.25
Outstanding at November 30, 1999	3,053	2.10 - 13.50	5.03
Granted	3,869	5.35 - 29.90	14.49
Exercised	(798)	2.06 - 13.50	4.08
Forfeited	(1,115)	2.10 - 15.25	14.44
Expired	(591)	7.70 - 13.50	7.88
Outstanding at November 30, 2000	4,418	$ 3.00 - $ 29.90	$10.65

For various price ranges (in CDN$), weighted average characteristics of outstanding stock options at November 30, 2000 were as follows:

		Outstanding options
Range of grant price	Shares (000's)	Remaining life (years)	Weighted average
$ 2.00 - $ 5.00	1,187	1.7	$ 3.31
5.01 - 9.00	752	1.1	7.69
9.01 - 29.90	2,478	2.6	15.27

The outstanding options expire between March 14, 2001 and November 16, 2004.

On November 16, 2000, the Board of Directors passed a resolution that allowed certain employees holding options granted in March 2000 at a price of CDN $15.25 (or the then US$ equivalent) and one senior officer with options at a price of $20.62 US to tender a maximum aggregate number of approximately 1.8 million options held by them for repricing. The exercise price of the repriced options, namely CDN $5.70 (or the then US$ equivalent), was the closing price of the Company's common shares on the Toronto Stock Exchange ("TSE") on November 15, 2000. The condition of the repricing was to introduce a vesting schedule where one third of the options will remain vested, one third will vest March 30, 2001 and the remaining options will vest on March 30, 2002. Repricing of any of these options held by insiders, as defined by the Securities Act (Ontario), requires shareholder approval. Non-employee directors' options were excluded from the repricings. At November 30, 2000, no options had been tendered and the market price of the underlying common shares was CDN $4.10.

10. Earnings per share

The Company adopted CICA 3500 "Earnings per Share" during the year ended November 30, 2000 and has retro-actively restated earnings per share, where required, for all periods presented. The calculations of the earnings per share are based on the weighted daily average number of shares outstanding during the year. The calculation of diluted earnings per share assumes that all outstanding options and warrants have been exercised at the later of the beginning of the fiscal period or the option issuance date. As the impact of the exercise of these options and warrants is anti-dilutive in 2000 and in 1998, outstanding options and warrants have been excluded from the calculation of diluted earnings per share. See Note 9 for these other potentially dilutive instruments. In 1999, the dilutive effect of the weighted average share calculation results from the potential exercise of employee stock options.

11. Commitments

The Company rents office premises, sponsors various sporting events and venues, and is obligated to pay minimum product royalties under long-term agreements. Rent expense pursuant to lease obligations aggregated $7,654, $7,169 and $7,155 during the years ended November 30, 2000, 1999 and 1998, respectively. At November 30, 2000, the minimum commitments under long-term agreements, are as follows:

2001	$ 3,626
2002	3,670
2003	3,363
2004	3,392
2005	3,321
2006 and thereafter	42,367
	$ 59,739

12. Contingencies

On October 2, 2000, concurrent with the issuance of Series A preferred shares (see Note 9), the Company entered into a technology support and settlement agreement with Microsoft. Together with the purchase of such Series A preferred shares, Microsoft received the option to request the Company to perform certain product development work. The Company is obligated to provide at least 30 full time equivalents (20 developers and 10 testers) for a 12-month period to Microsoft upon receipt of Microsoft's written intent to exercise the option. The option is exercisable for a period of three years from the effective date. The Company estimated the costs to perform the services described as being $3.0 million based on the estimated average cost per developer and tester required to perform the services when required. If the actual costs to perform the required services is less than the $3.0 million deducted from equity, the remainder of the liability will be recorded as an increase in contributed surplus.

The Company is a party to a number of claims arising in the ordinary course of business relating to employment, intellectual property and other matters. Based on its review of the individual matters the Company believes that such claims, individually, will not have a material adverse effect on its business, financial position or results of operations but, in the aggregate, may have a material adverse effect on its business, financial position or results of operations. Such possible effect cannot be reasonably estimated at this time.

13. Cost of sales

	Year ended November 30
	2000	1999	1998
Cost of goods sold	$ 28,036	$ 35,377	$ 27,119
License amortization	11,880	12,674	13,321
Royalties	7,109	11,465	11,121
	$ 47,025	$ 59,516	$ 51,561

14. Restructuring charge

On September 11, 1998, approximately 460 employees were terminated at the Orem, Utah facility. The balance of the workforce at that location remained with the Company until February 1, 1999 and assisted with the transfer of the source code and technical services to the Ottawa facility. As at November 30, 2000, the restructuring accrual included in accounts payable and accrued liabilities is comprised the following amounts:

	Asset write-downs	Severance costs	Facilities closure costs	Total
Restructuring charge during the fiscal year	$ 3,086	$ 10,104	$ 2,690	$ 15,880
Payments		(6,395)	(1,344)	(7,739)
Re-allocation		(1,842)	1,842
Non-cash asset write-downs	(3,086)			(3,086)
Restructuring accrual at November 30, 1998		1,867	3,188	5,055
Payments		(2,100)	(1,705)	(3,805)
Re-allocation		233	(233)
Restructuring accrual at November 30, 1999			1,250	1,250
Payments			(954)	(954)
Restructuring accrual at November 30, 2000			$ 296	$ 296

15. Segmented information

The Company has only one global operating segment, as detailed in the consolidated financial statements included herein.

The Company sells its products worldwide from four geographic regions. A summary of sales by product group, sales channel, region and major customer from consolidated operations is as follows:

	Year ended November 30
	2000	1999	1998
By product group
Creative products	$ 75,919	$ 106,592	$ 133,841
Business applications products	78,917	132,948	111,990
Other	2,651	3,511	996
	$ 157,487	$ 243,051	$ 246,827
By sales channel
Retail packaged products	$ 80,069	$ 140,200	$ 153,623
OEM licenses	17,640	26,972	23,340
Corporate licenses	59,778	75,879	69,864
	$ 157,487	$ 243,051	$ 246,827
By region
Canada	$ 13,181	$ 13,833	$ 14,942
U.S.A.	83,355	141,972	137,938
Europe	42,453	64,123	73,089
Other	18,498	23,123	20,858
	$ 157,487	$ 243,051	$ 246,827
By major customer
Ingram Micro Inc.	$ 27,123	$ 43,810	$ 57,994
All others	130,364	199,241	188,833
	$ 157,487	$ 243,051	$ 246,827

Included in creative products revenues are consumer applications products which were relatively consistent from fiscal 1998 ($27.6 million) to fiscal 1999 ($24.0 million). In fiscal 2000, as Corel realigned itself and moved away from promoting these products, these revenues declined significantly and are no longer managed or accounted for as a separate segment.

16. Significant differences between Canadian and United States GAAP

The Company's financial statements are prepared on the basis of Canadian GAAP, which differs in some respects from US GAAP. For the periods ended November 30, 2000, 1999 and 1998 these differences do not result in any difference in the reported income, loss or cash flows for those periods. Significant effects of differences between Canadian GAAP and US GAAP are set forth below:

Accounting for stock-based compensation

The Company applies Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees"

("APB 25") and related interpretations in accounting for its employee stock option plan. Accordingly, the Company also applies United States Financial Accounting Standards Board ("FASB") Interpretation No. 44, "Accounting for Certain Transactions involving Stock Compensation - an interpretation of APB No. 25" ("FIN 44"), providing new accounting rules for stock-based compensation under APB 25. FIN 44 does not change FASB Statement of Financial Accounting Standards ("SFAS") No. 123 "Accounting for Stock-Based Compensation" ("SFAS 123") and, as such, no compensation expense has been recognized for its stock-based compensation plan. Had compensation cost for the Company's employee stock option plan been determined based on the fair value at the grant date for awards under the plan, consistent with the methodology prescribed under the SFAS 123, the Company's net income (loss) would have changed to the pro forma amounts indicated as follows:

	Year ended November 30
	2000	1999	1998
Net income (loss) as reported	$ (55,348)	$ 16,716	$ (30,448)
Estimated stock-based compensation costs	(32,761)	(1,665)	(1,849)
Pro forma net income (loss)	$ (88,109)	$ 15,051	$ (32,297)
Pro forma income (loss) per share	$ (1.27)	$ 0.24	$ (0.54)

The fair values of all options granted during 2000, 1999 and 1998 were estimated as of the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:

	2000	1999	1998
Expected option life (years)	3.07	3.34	2.0
Volatility	105	86	45
Risk free interest rate	6.13%	4.78%	4.33%
Dividend yield	nil	nil	nil

The fair values, at the date of grant, for stock options granted during 2000, 1999 and 1998 were $9.02, $1.35 and $0.54 per option, respectively.

The Black-Scholes model, used by the Company to calculate option values, as well as other currently accepted option valuation models were developed to estimate the fair value of freely tradeable, fully transferable options without vesting restrictions, which significantly differ from the Company's stock option awards. These models also require highly subjective assumptions, including future stock price volatility and expected time until exercise, which greatly affect the calculated values. Accordingly, management believes that these models do not necessarily provide a reliable single measure of the fair value of the Company's stock option awards.

In accordance with FIN 44, the option repricing, as described in Note 9, will result in variable plan accounting for the re-priced options. At November 30, 2000, no options had been tendered and the market price of the underlying common shares was CDN. $4.10. Future periods may reflect compensation charges or credits depending on the fair market price of the underlying shares.

Available for sale securities

SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities" ("SFAS 115") requires available-for-sale securities to be marked to market with unrealized holding gains or losses being accounted for in other comprehensive income. Accordingly, the reported carrying value of investments would be increased by $1.4 million and $3.1 million at November 30, 2000 and 1999, respectively. In addition, income taxes payable would be increased by $0.3 million at November 30, 2000 and taxes recoverable would be decreased by $1.0 million at November 30, 1999.

Comprehensive income

The Company adopted SFAS No. 130, "Reporting Comprehensive Income" ("SFAS 130") effective December 1, 1998. SFAS 130 requires disclosure of comprehensive income, which includes reported net earnings adjusted for other comprehensive income. Other comprehensive income includes items that cause changes in shareholders' equity but are not related to share capital or net earnings which, for the Company, comprises only unrealized holding gains on available for sale securities.

	Year ended November 30
	2000	1999	1998
Net income (loss)	$ (55,348)	$ 16,716	$ (30,448)
Other comprehensive income:
Unrealized holding gains (losses) on available for sale securities	(1,669)	3,102
Related income tax	729	(1,038)
Comprehensive income (loss)	$ (56,318)	$ 18,780	$ (30,448)

New accounting pronouncements

In fiscal 1998, the FASB issued SFAS 133, "Accounting for Derivative Instruments and Hedging Activities", ("SFAS 133") which establishes standards for derivative instruments and hedging activities. It requires that all derivatives be recognized as either assets or liabilities on the Balance Sheet and be measured at fair value. SFAS 133 is effective for fiscal years beginning after June 15, 1999, which is the fiscal year beginning December 1, 1999 for the Company. Prior periods should not be restated. In June 1999, the FASB issued SFAS No. 137, which delays the effective date of SFAS 133 until fiscal years beginning after June 15, 2000, which is the fiscal year beginning December 1, 2000 for the Company. The Company believes the adoption of this pronouncement will not have a material impact on its results of operations or financial position.

In fiscal 2000, the SEC issued Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial Statements", and its related interpretations. The SAB summarizes certain of the SEC staff views in applying generally accepted accounting principles to revenue recognition in financial statements. This SAB is effective beginning the Company's first quarter of fiscal 2001.The Company does not expect the adoption of this SAB to have a material impact on its results of operations or financial position.

17. Restatement of Novell royalty obligation

The Company has restated its Consolidated Balance Sheets for the years ended November 30, 1996 through November 30, 1999, as presented below, to remove the contingent liability related to the Novell royalty obligation, see Note 8, and the corresponding acquired technology, see Note 5. In addition, the Company has conformed its Consolidated Statements of Cash Flows to reflect this restatement by reducing cash flows from operations and increasing cash flows from financing activities by $2.0 million, $3.6 million and $3.6 million in 2000, 1999 and 1998 respectively. The Company concluded, based on a review of its financial statements to be incorporated into a recently filed registration statement, that the accounting treatment and disclosure previously adopted was not appropriate. This restatement has no impact on the Company's previously reported results of operations or overall cash flows. Summarized comparative balance sheets for the years affected are presented below. In addition, certain other notes to these consolidated financial statements have been modified for clarification purposes only.

As at November 30,
	1999 As Reported	1999 As Restated	1998 As Reported	1998 As Restated	1997 As Reported	1997 As Restated (Unaudited)	1996 As Reported	1996 As Restated (Unaudited)
Assets
Current Assets	$ 99,131	$ 99,131	$ 95,383	$ 95,383	$ 100,246	$ 100,246	$ 195,333	$ 195,333
Investments	2,873	2,873
Future tax asset							870	870
Capital Assets	49,697	37,712	44,776	29,213	63,497	44,315	202,275	177,885
Total assets	$ 151,701	$ 139,716	$ 140,159	$ 124,596	$ 163,743	$ 144,561	$ 398,478	$ 374,088
Liabilities and shareholder's equity
Current liabilities
Current portion of Novell obligations	$ 10,594	$ 6,594	$ 11,800	$ 7,000	$ 13,500	$ 7,000	$ 15,500	$ 6,500
Other current liabilities	68,756	68,756	83,691	83,691	66,390	66,390	58,888	58,888
Total current liabilities	79,350	75,350	95,491	90,691	73,390	72,890	74,388	65,388
Novell obligations	7,985		16,085	5,322	24,044	11,362	33,830	18,440
Shareholders' equity
Share capital	222,155	222,155	203,088	203,088	204,235	204,235	202,953	202,953
Contributed surplus	1,099	1,099	1,099	1,099	730	730	352	352
Retained earnings (deficit)	(158,888)	(158,888)	(175,604)	(175,604)	(145,156)	(145,156)	86,955	86,955
Total shareholders' equity	64,366	64,366	28,583	28,583	59,809	59,809	290,260	290,260
Total liabilities and shareholders' equity	$ 151,701	$ 139,716	$ 140,159	$ 124,596	$ 163,743	$ 144,561	$ 398,478	$ 374,088

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

PART III

Item 10. Directors and Executive Officers of the Registrant

The following table sets forth certain information with respect to the executive officers and directors of Corel as at February 21, 2001:

NAME	Age	Position with the Company
Derek Burney	38	President and Chief Executive Officer, Director
John Blaine	39	Executive Vice President, Finance, Chief Financial Officer and Treasurer
Graham Brown	37	Executive Vice President, Business Applications
Steve Houck	31	Executive Vice President, Sales
Ian Legrow	30	Executive Vice President, Creative Products
Annette McCleave	41	Executive Vice President, Marketing
Rene Schmidt	43	Executive Vice President, Chief Technology Officer
James Baillie	63	Chairman of the Board
Lyle B. Blair (1)	70	Director
Hunter S. Grant (1)	58	Director
Jean-Louis Malouin	57	Director
Hon. Barbara McDougall	63	Director
Lawrence O'Brien (1)	51	Director

________

(1) Member of the Audit Committee

Derek Burney joined the Company in April 1994 as the Project Leader for CorelFLOW. Mr. Burney was promoted to Technology Manager in August 1995 and then Director of CAD 3D in February 1996. He held this position until October 1997 when he left the Company to work at IMSI (International Microcomputer Software Inc.) in the product group that purchased CorelCAD, Corel Visual CADD, CorelFLOW, Corel Lumiere Suite, Corel Click & Create and Corel Family Tree Suite from the Company. Upon his return to the Company in May 1998, Mr. Burney served as Senior Vice President - Engineering until December 1998 at which time he was promoted to Executive Vice President, Engineering. Mr. Burney held this position until October 2000 at which time he was named President and Chief Executive Officer and appointed to the Board of Directors.

John Blaine joined the Company in April of 2000 as Chief Financial Officer and Executive Vice President, Finance. Mr. Blaine is responsible for the Company's worldwide financial operations. Prior to joining the Company Mr. Blaine served as Vice-President and Controller in the Dublin, Ohio corporate offices of Sterling Commerce Inc., an electronic commerce software and services provider.

Graham Brown has been with the Company for nine years. He has served as Developer and Project Lead for CorelDRAW, Development Manager for Corel VENTURA Publisher and WordPerfect, and Director of Software Development for WordPerfect Office. Prior to being named to his current position as Executive Vice President, Business Applications in October of 2000, Mr. Brown served as Vice President of Software Development, Business Applications from June 1998.

Steven Houck joined the Company in 1995 as a consultant for its multimedia division. He then moved on to become manager of the Company's OEM Accounts. In December of 1999 he moved into his current position as Executive Vice President, Sales and is responsible for overseeing the worldwide sales operations for the Company.

Ian Legrow joined the Company in 1994 and has held various positions in product development. Prior to being named to his current position of Executive Vice President, Creative Products in October of 2000, Mr. Legrow served as Vice President of Software Development, CorelDraw Graphics Suite from June 1998.

Annette McCleave joined the Company in 1990 as a member of the technical marketing team. She has served as Product Manager for CorelDRAW during the release of versions 4 and 5 and went on to become Director, then Vice-President, of Product Management. Prior to her appointment as Executive Vice-President, Marketing, in February of 2001, Ms. McCleave served as Executive Vice President, Corporate Communications from October 2000 until February 2001 and prior to that she served as Vice-President of the New Ventures division from June 1998.

Rene Schmidt joined Corel in 1995 and brings over sixteen years of software development experience to his position, including several years with Instantel Inc. as Chief Software Architect and Software Development Manager. Prior to his appointment as Executive Vice President, Linux Products, in October of 2000, Mr. Schmidt led the scripting, common user interface and installation teams, and managed the Paradox, Quattro Pro, Corel LINUX OS and Linux porting development teams. Mr. Schmidt was appointed Chief Technology Officer in February, 2001.

James C. Baillie joined the Board of Directors as Chairman in August 2000. Mr Baillie is counsel to Torys, Barristers and Solicitors, where he practices in the general area of business law with an emphasis on financial institutions and securities law. Mr. Baillie was the Chair of the Ontario Securities Commission between 1978 and 1980 and was also the initial Chair of the federal government's Task Force on the Future of the Canadian Financial Services Sector from December 1996 to July 1997. Currently Mr Baillie is the Chair of the Independent Electricity Market Operator (Ontario) and is a director of Sun Life Financial Services of Canada Inc. and FPI.

Lyle B. Blair has been a Director since September 1989. Mr. Blair has been Chairman of L.B. Blair Management Ltd. since 1976. L.B. Blair Management Ltd. has owned and operated several companies including, from 1980 to 1992, Storwal International Inc., an office furniture manufacturer, and Thames Valley Beverages, the largest independent Ontario Pepsi bottler, from 1976 to 1988. Prior to 1976, Mr. Blair held senior international positions with Procter & Gamble Inc. and Pepsico Inc.

Hunter S. Grant has been a Director since September 1989. Mr. Grant was the Co-Publisher, President and General Manager of the Recorder and Times Limited, a newspaper publishing company, from July 1977 until July 1998. He is currently the President of Kingmer Holding Ltd.

Jean-Louis Malouin became a Director in November 1997. Dr. Malouin is a Professor in the Faculty of Administration at the University of Ottawa where he served as Dean between 1992 and 2000. From 1989 to 1992, Dr. Malouin was the Dean of Administration at the University of Alberta and is a former dean at the Université Laval. He is an expert in operations and production management, management information systems design and research methodology. He has served as a management consultant for numerous organizations and institutions including the Canadian International Development Agency (CIDA), the Université du Québec and the Ottawa Economic Development Corporation (OCEDCO).

Hon. Barbara McDougall became a Director in April 1998. Since February, 1999, Mrs. McDougall has been President and Chief Executive Officer of the Canadian Institute of International Affairs. Prior to that appointment, she was a private consultant on corporate governance and on international business. Mrs. McDougall was also chairperson of the Board of Directors of AT&T Canada. Her current corporate directorships include the Bank of Nova Scotia, Stelco Inc., and the Independent Order of Foresters. Prior to 1993, Mrs. McDougall was a Member of Parliament and Cabinet Minister in the Canadian Federal Government.

Lawrence O'Brien became a director in August 2000. Mr. O'Brien founded CALIAN Technology Ltd., a consulting firm that sells information technology and professional services to industry and government worldwide, in 1982. Mr. O'Brien retired as Chief Executive Officer of CALIAN Technology in May 2000 but remains the Chairman of the Board.

Under the Canada Business Corporations Act, a majority of the Board of Directors and a majority of Board Committee members must be resident Canadians. All directors hold office until the next annual meeting of shareholders and until their successors have been elected. The executive officers of the Company serve at the discretion of the Board of Directors of the Company. There are no family relationships among any of the directors and executive officers of the Company.

The Audit Committee reviews the internal accounting procedures of the Company, consults with and reviews the services provided by the Company's independent auditors and is responsible for corporate governance issues relating to the Company.

The Compensation Committee has a mandate to: (a) monitor compliance with provincial legislation applicable in respect of employment practices of the Company, (b) determine the appropriate allocation of stock options to eligible participants in the Corel Corporation Stock Option Plan, (c) determine Chief Executive Officer and senior officer compensation, (d) monitor compliance with statutory requirements for employment matters including remittances and legislation, and (e) review general policy matters relating to employment and wage equity, compensation and benefits of employees of the Company generally. The Committee met eight times in fiscal 2000 and acted by way of resolution on other occasions.

The Company has a policy of compensation based on merit and performance and does not discriminate or distinguish with respect to persons performing similar functions. Compensation in the Company, as compared to industry surveys, is consistent with industry standards at the level necessary to attract and retain qualified personnel.

Item 11. Executive Compensation

The following table, presented in CDN$, in accordance with the regulations of the Securities Act (Ontario), sets forth all compensation paid in respect of the individuals who were, at November 30, 2000, the Chief Executive Officer and the other four most highly compensated executive officers of the Company and three former executive officers who were no longer with the company at November 30, 2000 but otherwise would have been included in the most highly compensated executive officers of the Company (the "named executive officers").

SUMMARY COMPENSATION TABLE

					Long-Term
		Annual Compensation			Compensation
				Other		All
				Annual	Securities	Other
Name and Principal				Compen-	Under Options	Compen-
Position	Year	Salary	Bonus	sation (1)	Granted (#)	sation
Derek J. Burney	2000	$293,077	Nil	-	225,000
President, and	1999	240,000	Nil	-	81,000
Chief Executive Officer	1998	158,753	$21,830	-	95,800
Steven Houck	2000	275,399	Nil	-	63,600	-
Executive Vice President,	1999	168,850	Nil	-	4,200	-
Sales	1998	133,085	Nil	-	3,500	-
Annette McCleave	2000	167,500	Nil	-	54,700	-
Executive Vice President,	1999	139,699		-	16,000	-
Corporate Marketing	1998	118,216		-	15,500	-
Ian Legrow	2000	163,269	Nil	-	54,700	-
Executive Vice President,	1999	154,346		-	13,000	-
Creative Products	1998	130,828		-	9,600	-
Graham Brown	2000	163,269	Nil	-	54,700	-
Executive Vice President,	1999	155,471		-	16,000	-
Business Applications	1998	135,309		-	15,500	-
Michael C.J. Cowpland(2)	2000	166,269	Nil	-	341,100	-
former Chairman,	1999	297,000	Nil	-	299,800	-
President, and Chief	1998	296,481	Nil	-	275,000	-
Executive Officer						-
Kerry D. Williams (2)	2000	221,601	Nil	-	28,400	200,000 (3)
former Executive Vice	1999	198,000	Nil	-	67,900	-
President, Manufacturing	1998	197,654	Nil	-	31,200	-
Carey Stanton (2)
former Executive	2000	186,692	Nil	-	80,000	-
Vice President, Business	1999	198,000	Nil	-	67,900	-
Development	1998	197,653	Nil	-	81,200	-

Notes:

⁽¹⁾ Perquisites and other personal benefits do not exceed the lesser of CDN$50,000 and 10% of the total of the annual salary and bonus for any of the named executive officers.

⁽²⁾ This additional disclosure includes individuals for whom disclosure would have been provided as part of the four most highly paid executive officers above but for the fact that the individuals were not serving as executive officers of the Company at the end of fiscal 2000.

⁽³⁾ This represents amounts paid, payable or accrued to the named executive officer pursuant to an arrangement in connection with the termination of such executive officer's employment with the Company.

The following table sets forth the stock options granted under the Corel Corporation Stock Option Plan 2000 during the fiscal year ended November 30, 2000 to the named executive officers.

OPTION GRANTS FOR THE YEAR ENDED NOVEMBER 30, 2000

AND POTENTIAL REALIZABLE VALUE OF EACH GRANT OF OPTIONS

					Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Option Term (CDN$)
	Number of	% of total	Exercise
	Securities	Options	or base
	underlying	granted to	Price
	options	employees in	($/share)	Expiration
Name	granted (#)	fiscal year	(CDN$)	Date	5% ($)	10 % ($)
Michael C.J. Cowpland	341,100	8.82%	$ 15.25	September 15, 2000	$ 121,015	$ 2,414,143
Derek Burney	100,000	2.58%	$ 15.25	March 30, 2004	328,647	707,752
	125,000	3.23%	$ 8.20	October 5, 2004	220,893	475,702
Graham Brown	19,700	0.51%	$ 15.25	March 30, 2004	64,743	139,427
	35,000	0.90%	$ 8.20	October 5, 2004	61,850	133,196
Steve Houck	10,000	0.26%	$20.62*	January 17, 2004	44,437*	95,697*
	18,600	0.48%	$10.56*	March 30, 2004	42,328	91,156
	35,000	0.90%	$5.53*	October 5, 2004	41,711	89,826
Ian Legrow	19,700	0.51%	$ 15.25	March 30, 2004	64,743	139,427
	35,000	0.90%	$ 8.20	October 5, 2004	61,850	133,196
Annette McCleave	19,700	0.51%	$ 15.25	March 30, 2004	64,743	139,427
	35,000	0.90%	$ 8.20	October 5, 2004	61,850	133,196
Rene Schmidt	19,700	0.51%	$ 15.25	March 30, 2004	64,743	139,427
	35,000	0.90%	$ 8.20	October 5, 2004	61,850	133,196
Kerry D. Williams	28,400	0.73%	$ 15.25	December 31, 2000	93,335	201,001
Carey Stanton	80,000	2.07%	$ 15.25	July 21, 2001	262,917	566,202

(*) Steve Houck's options and related information are listed in US$.

The following table sets forth each exercise of stock options under the Corel Corporation Stock Option Plan during the fiscal year ended November 30, 2000 by the named executive officers.

AGGREGATED OPTION EXERCISES DURING THE FISCAL YEAR ENDED

NOVEMBER 30, 2000 AND FISCAL YEAR-END OPTION VALUES

				Value of
				Unexercised
	Securities		Unexercised	in-the-Money
	Acquired	Aggregate Value	Options at	Options at
	on Exercise	Realized	Nov. 30, 2000	Nov. 30, 2000
Name	(#)	(CDN$)	(#)	(CDN$)
Derek Burney	-	$ -	247,809	$ 11,680
Steven Houck	-	-	63,600	-
Annette McCleave	8,267	189,457	59,700	3,650
Ian Legrow	3,000	78,205	70,700	11,680
Graham Brown	-	-	56,700	1,460
Michael C.J. Cowpland	-	-	917,023	521,354
Kerry D. Williams	-	-	-	-
Carey Stanton	20,264	94,007	80,000	-

All options are exercisable when granted. The only exceptions are options granted during an employee's probationary period, usually six months in length. Those options that were repriced,as described in Note 9 to the consolidated financial statements (See Item*), and certain options recently granted which are exercisable as to one-third on each of the date of original grant and the first and second anniversaries thereof.

Compensation of Directors

Directors who are salaried officers of the Company receive no compensation for serving on the Board of Directors. The other directors (the "independent directors"), of whom there are currently six, receive an annual retainer of CDN $16,000 (CDN $25,000 for Board Chair) and a fee of CDN $1,000 (CDN $2,000 for Board and Committee Chairs and Board Vice-Chair) for each Board of Directors and Committee meeting they attend, and are reimbursed for traveling costs and other out-of-pocket expenses incurred in attending such meetings. During the transition phase of the Company from August 15 to December 6, 2000, each non-employee director was also entitled to receive an hourly rate of CDN $250 for each hour spent on the business of the Company outside of regularly scheduled meetings.

On August 15, 2000, a Deferred Share Units Plan ("DSP") for non-employee members of the Board od Directors was established by the Company . Under the DS, each director may elect to be paid up to 100% of his or her compensation in deferred share units ("DSUs"). A DSU is credited by means of a bookkeeping entry in the books of the Company to an account in the name of the director and payable only at the end of his or her mandate on the Board of Directors, in cash or by way of Common Shares equal in number to the DSUs credited to the director's account, based on the market value of the Common Shares at that time. The number of DSUs credited to each director is determined on the basis of the portion elected by each director of the amount payable to such director for the director's retainer and meeting fees for each financial quarter, divided by the value of a DSU (which is equal to the closing price of the Common Shares on The Toronto Stock Exchange ("TSE") on the third trading day after the announcement of the results for such financial quarter). DSUs are credited with dividend equivalents when dividends are paid on Common Shares and such dividend equivalents are converted into additional DSUs. Additional compensation consisting of options for Common Shares mat be awarded to non-employee directors as the Board of Directors deems appropriate.

The total compensation earned by non-employee directors in the financial year ending November 30,2000 for duties performed during that fiscal year was CDN $ 300,625. As of February 26, 2001, a total of 23,155 Units have been credited to directors.

Employment Contracts and Termination of Employment and Change-in-Control Arrangements

There are no clauses in the employment contracts for executives that are materially different from those of other employees in the Company. Some of the items included in a standard employee contract are health benefits, fitness benefits and company paid on-site parking; as well as non-competition and confidentiality clauses.

Item 12. Security Ownership of Certain Beneficial Owners and Management

The following table sets forth, as ofFebruary 21, 2001, certain information with respect to the beneficial ownership of Common Shares by (1) each person known by the Company to be a beneficial owner of more than 5% of its outstanding Common Shares, (2) by each director and named executive officer and (3) by all directors and executive officers as a group.

Name and Address of Beneficial Owner	Common Shares Beneficially Owned	Exercisable Options within 60 days	Percentage Owned (1)
Dr. Michael C.J. Cowpland (2)	5,150,558	1,646,176	9.2
Lyle B. Blair		30,000	*
James C. Baillie		5,000	*
Hunter S. Grant	5,000	37,852	*
Jean Louis Malouin		30,000	*
Barbara McDougall		30,000	*
Lawrence O'Brien	40,000	5,000	*
John Blaine		100,000	*
Derek Burney		247,809	*
Graham Brown		54,900	*
Steve Houck		63,600	*
Ian Legrow		75,888	*
Annette McCleave		62,985	*
Rene Schmidt		63,700	*
Directors and Executive Officers as a group (13 persons) (3)	5,196,458	2,452,910	10.0

* Indicates less than 1%

(1) Percentage ownership is calculated using as a denominator the total number of Common Share outstanding plus the number of Common Shares to which the beneficial owner indicated has a right to acquire pursuant to options currently exercisable or exercisable within 60 days.

(2) Dr. Michael C.J. Cowpland resigned as President, Chief Executive Officer and Chairman of the Board of Directors on August 15, 2000. Dr. Cowpland resigned from the Board of Directors on January 25, 2001.

(3) The address for each director and executive officer is Corel Corporation, 1600 Carling Avenue, Ottawa, Ontario, Canada K1Z 8R7.

Statements contained in the table as to securities beneficially owned by directors, executive officers and beneficial owners of more than 5% of the Company's outstanding Common Shares are, in each instance, based upon information obtained from such directors and executive officers. Statements contained in the table as to securities beneficially owned by beneficial owners of holders of 5% or more of the Company's outstanding Common Shares are based on Schedules 13G or 13D filed by such persons with the U.S. Securities and Exchange Commission.

Item 13. Certain Relationships and Related Transactions

Inapplicable pursuant to Instruction 3 to Item 404 of Regulation S-K.

PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(a) The following documents are filed as a part of this Annual Report on Form 10-K.

1. Financial Statements

2. Financial Statement Schedule

The following financial statement schedule and related auditors' report are filed as part of this report herewith as Exhibits 99.1 and 99.2:

Schedule II Valuation and Qualifying Accounts for the years ended November 30, 2000, 1999 and 1998

All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and therefore have been omitted.

3. Exhibits

Exhibit Number	Description
3.1	Certificate and Articles of Incorporation (1)
3.2	By-law No. 6 (1)
3.3	Certificate and Articles of Amalgamation of Corel Corporation and Corel Computer Corp. (1)
3.4	Amendment to Articles of Incorporation (2)
4.1	Specimen of Common Share Certificate (1)
4.2	Shareholder Rights Plan Agreement dated February 11, 1999, as amended and restated as of March 31, 1999, by and between the Company and Montreal Trust Company of Canada, as rights agent. (3)
10.1	Corel Corporation Stock Option Plan, as amended (4)
10.2	Corel Corporation Stock Option Plan 2000 (4)
10.3	Share Purchase Agreement dated September 18, 2000 by and between the Company and Albans Investments Limited (2)
10.4	Registration Rights Agreement dated September 18, 2000 by and between the Company and Albans Investments Limited. (2)
10.5	Escrow Agreement dated September 18, 2000 by and between the Company, Albans Investments Limited and Epstein Becker & Green, P.C., as escrow agent. (2)
10.6	Form of Share Purchase Warrant between the Company and each of Albans Investment Limited, Whale Securities Co., L.P., and Richard Geyser. (2)
10.7	Share Purchase Agreement dated October 2, 2000 by and between the Company and Microsoft Corporation (5)
10.8	Registration Rights Agreement dated October 2, 2000 by and between the Company and Microsoft Corporation (5)
10.9	Technology and Services Agreement dated October 2, 2000 by and between the Company and Microsoft Corporation (5)
21.1	Subsidiaries of Registrant (2)
23.1	Consent of PricewaterhouseCoopers LLP Chartered Accountants (2)
99.1	Financial Statement Schedule - Schedule II - Valuation and Qualifying Accounts for the years ended November 30, 2000, 1999 and 1998 (2)
99.2	Auditors' Report to the Board of Directors on Financial Statement Schedules (2)

(1) Previously filed as an exhibit to the Company's Registration Statement No. 33-50886 and incorporated herein by reference.

(2) Filed herewith

(3) Previously filed as an exhibit to the Company's Registration Statement No. 000-20562 and incorporated herein by reference

(4) Previously filed as an exhibit to the Company's Registration Statement No. 333-42790 and incorporated herein by reference

(5) Previously filed as an exhibit to the Current Report on Form 8-K dated October 2, 2000 and incorporated herein by reference.

(b) Reports on Form 8-K

During the three-month period ended November 30, 2000 the Company filed three Current Reports on Form 8-K including information requested under Item 5 and Item 7 as follows:

On September 12, 2000, the Company reported on the proposed consolidation of its engineering operations, based in Dublin, Ireland to its corporate headquarters in Ottawa, Canada.

On September 28, 2000, the Company reported that it had entered into a share purchase agreement with an institutional investor.

On October 11, 2000, the Company reported that it had entered into agreements with Microsoft Corporation whereby Microsoft Corporation would purchase 24 million non-voting, convertible Series A preferred shares.

(c) Exhibits

The response to this portion of Item 14 is submitted as a separate section of this report.

(d) Financial Statement Schedules

The response to this portion of Item 14 is submitted as a separate section of this report.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Ottawa, Province of Ontario, Canada, on September 6, 2001.

COREL CORPORATION
By	/s/ John Blaine
	John Blaine
	Executive Vice President, Finance, Chief
	Financial Officer and Treasurer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Derek Burney and John Blaine, his or her Attorneys-in-fact, each with full power of substitution, for him or her in any and all capacities, to sign any amendments to this Annual Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each said Attorney-in-fact, or his or her substitute or substitutes, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities indicated on September 6, 2001.

Signature	Title
/s/ James Baillie	Chairman of the Board
James Baillie
/s/ Derek J. Burney	President and Chief Executive Officer, Director
Derek J. Burney
/s/ Lyle B. Blair	Director
Lyle B. Blair
/s/ Hunter S. Grant	Director
Hunter S. Grant
/s/ Jean-Louis Malouin	Director
Jean-Louis Malouin
/s/ Barbara McDougall	Director
Barbara McDougall
/s/ John Blaine	Chief Financial Officer and
John Blaine	Executive Vice President, Finance
	(principal financial and accounting officer)

Schedule II - 1

Index to Exhibits

Exhibit Number	Description
3 .1	Certificate and Articles of Incorporation (1)
3.2	By-law No. 6 (1)
3.3	Certificate and Articles of Amalgamation of Corel Corporation and Corel Computer Corp. (1)
3.4	Amendment to Articles of Incorporation (2)
4.1	Specimen of Common Share Certificate (1)
4.2	Shareholder Rights Plan Agreement dated February 11, 1999, as amended and restated as of March 31, 1999, by and between the Company and Montreal Trust Company of Canada,as rights agent. (3)
10.1	Corel Corporation Stock Option Plan, as amended (4)
10.2	Corel Corporation Stock Option Plan 2000 (4)
10.3	Share Purchase Agreement dated September 18, 2000 by and between the Company and Albans Investments Limited (2)
10.4	Registration Rights Agreement dated September 18, 2000 by and between the Company and Albans Investments Limited. (2)
10.5	Escrow Agreement dated September 18, 2000 by and between the Company, Albans Investments Limited and Epstein Becker & Green, P.C., as escrow agent. (2)
10.6	Form of Share Purchase Warrant between the Company and each of Albans Investment Limited, Whale Securities Co., L.P., and Richard Geyser. (2)
10.7	Share Purchase Agreement dated October 2, 2000 by and between the Company and Microsoft Corporation (5)
10.8	Registration Rights Agreement dated October 2, 2000 by and between the Company and Microsoft Corporation (5)
10.9	Technology and Services Agreement dated October 2, 2000 by and between the Company and Microsoft Corporation (5)
21.1	Subsidiaries of Registrant (2)
23.1	Consent of PricewaterhouseCoopers LLP Chartered Accountants (2)
99.1	Financial Statement Schedule - Schedule II - Valuation and Qualifying Accounts for the years ended November 30, 2000, 1999 and 1998 (2)
99.2	Auditors' Report to the Board of Directors on Financial Statement Schedules (2)